Seiko Time Canada Ltd. v. Consumers Distributing Co., (1984) 54 N.R. 161 (SCC)

• Judge: Laskin, C.J.C., Dickson, Estey, McIntyre and Chouinard, JJ.
• Court: Supreme Court (Canada)
• Case Date: June 21, 1984
• Jurisdiction: Canada (Federal)
• Citations: (1984), 54 N.R. 161 (SCC);29 CCLT 296;1984 CanLII 73 (SCC);10 DLR (4th) 161;54 NR 161;[1984] SCJ No 27 (QL);[1984] 1 SCR 583;1 CPR (3d) 1

Seiko Time Can. v. Consumers Distr. (1984), 54 N.R. 161 (SCC)

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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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SEiko Time Canada Ltd. v. Consumers Distributing Co. Ltd.

Indexed As: Seiko Time Canada Ltd. v. Consumers Distributing Co.

Supreme Court of Canada

Laskin, C.J.C., Dickson, Estey, McIntyre and Chouinard, JJ.

June 21, 1984.

Summary:

A Japanese watch manufacturer sold its Seiko watches to its authorized Canadian distributor, which in turn sold the watches to authorized dealers. Only watches sold through the authorized network were serviced under the manufacturer's guarantee by the Canadian distributor. Consumers Distributing legally bought Seiko watches from the authorized American distributor selling outside the authorized network and sold them as Seiko watches in Canada, holding itself out as an authorized dealer. The Canadian distributor brought an action to restrain Consumers Distributing from holding itself out as an authorized dealer and from selling or advertising the watches at all. The distributor claimed that Consumers Distributing committed the tort of passing off, both in its classic and extended forms. Before trial an interlocutory injunction restrained Consumers Distributing from holding itself out as an authorized dealer and required it to post a notice in its show rooms and catalogs informing customers that it was not an authorized dealer and that the guarantee would not be honoured by the Canadian distributor. At trial Consumers Distributing agreed to the interlocutory injunction being made permanent. Evidence established that there was no confusion among customers following posting of the notice.

The Ontario High Court allowed the Canadian distributor's action and further enjoined Consumers Distributing from advertising or selling Seiko watches in Canada and awarded $5,000 damages, presumably for the pre-notice period. The distributor appealed.

The Ontario Court of Appeal in a judgment reported 128 D.L.R.(3d) 767; 34 O.R.(2d) 481; 60 C.P.R.(2d) 222, dismissed the appeal on the ground that permitting Consumers Distributing to continue selling the watches would allow it to continue trading on the distributor's good will and would permit a deception of the public. The distributor appealed.

The Supreme Court of Canada allowed the appeal and held that Consumers Distributing could not be restrained from selling or advertising the watches in Canada. The court held that the conditions for finding of the tort of passing off were not met, because once Consumers Distributing customers had the guarantee notice, there was no misrepresentation of the product and no confusion. The court held that Consumers Distributing was properly restrained from holding itself out as an authorized dealer and ordered to inform its customers that the guarantee on the watches it sold would not be honoured in Canada.

Torts - Topic 5141

Interference with economic relations - Unfair competition - Passing off - General - The Supreme Court of Canada discussed the general principles of the tort of passing off in its classic form (see paragraphs 17 to 24) and in its so-called extended form (see paragraphs 25 to 41).

Torts - Topic 5141

Interference with economic relations - Unfair competition - Passing off - General - A Japanese watch manufacturer sold its Seiko watches to its authorized Canadian distributor, which in turn sold watches to authorized dealers - Only watches sold through the authorized network were serviced under the guarantee by the Canadian distributor - Consumers Distributing legally bought Seiko watches from the authorized American distributor selling outside the authorized network and sold them in Canada, holding itself out as an authorized dealer - The Canadian distributor brought an action on the tort of passing off to restrain Consumers Distributing from holding itself out as an authorized dealer and from selling or advertising the watches at all - The Supreme Court of Canada held that Consumers Distributing was properly restrained from holding itself out as an authorized dealer and ordered to inform its customers that the watches it sold were not guaranteed - The court held that the tort of passing off was not committed and Consumers Distributing could not be restrained from selling the watches, because once Consumers Distributing customers were informed that their guarantees would not be honoured, there was no misrepresentation of the product and no confusion.

Cases Noticed:

Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co., [1894] A.C. (H.L.) 535, consd. [para. 17].

Attorney General of Australia v. Adelaide Steamship Companies Ltd., [1913] A.C. 781, consd. [para. 17].

Erven Warnink BV v. Townend & Sons, [1979] 2 All E.R. 927, consd. [para. 18]; dist. [paras. 25 and 33].

Millington v. Fox (1838), 3 M. & Cr. 338, consd. [para. 23].

Perry v. Truefitt (1842), 6 Beav. 66; 49 E.R. 794, consd. [para. 23].

Cellular Clothing Co. v. Maxton & Murray, [1899] A.C. 326, consd. [para. 23].

A.G. Spalding & Bros. v. A.W. Gamage Ltd. (1915), 32 R.P.C. 273, dist. [paras. 25 and 34].

J. Bollinger and Others v. Costa Brava Wine Co., Ltd. (No. 1), [1959] 3 All E.R. 800; [1960] R.P.C. 16, dist. [para. 29].

Bollinger and Others v. Costa Brava Wine Co. Ltd. (No. 2), [1961] 1 All E.R. 561; [1961] R.P.C. 116, consd. [para. 25].

Inland Revenue Commissioners v. Muller & Company's, Margarine Ltd., [1901] A.C. 217, consd. [para. 30].

Draper v. Trist, [1939] 3 All E.R. 516, consd. [para. 30].

Morris Motors, Ltd. v. Lilley, [1959] 3 All E.R. 737, consd. [para. 31].

Remington Rand Limited v. Transworld Metal Co. Ltd., [1960] Ex. C.R. 463, dist. [para. 42].

Authors and Works Noticed:

Fleming, The Law of Torts (6th Ed.), p. 674 [para. 19].

Fox on Copyrights (2nd Ed. 1967), pp. 440-441 [para. 42].

Prosser, The Law of Torts (4th Ed.), pp. 957-958 [para. 20].

Salmond on Torts (17th Ed.), pp. 400401, 403, 404 [para. 18].

Counsel:

Benjamin Zarnett and Joel Wiesenfeld, for the appellant;

J.M. Roland, Q.C., and B.G. Morgan, for the respondent.

This case was heard on November 28, 1983 at Ottawa, Ontario before Laskin, C.J.C., Dickson, Estey, McIntyre and Chouinard, JJ., of the Supreme Court of Canada.

On June 21, 1984 Estey, J., delivered judgment for the Supreme Court of Canada. Laskin, C.J.C., did not take part in the judgment.