Target Event Production Ltd. v. Cheung et al., (2010) 409 N.R. 118 (FCA)

• Judge: Nadon, Sharlow and Layden-Stevenson, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: September 16, 2010
• Jurisdiction: Canada (Federal)
• Citations: (2010), 409 N.R. 118 (FCA);2010 FCA 255;70 CBR (5th) 88;[2010] SJ No 407 (QL);360 Sask R 76

Target Event Production Ltd. v. Cheung (2010), 409 N.R. 118 (FCA)

MLB headnote and full text

Temp. Cite: [2010] N.R. TBEd. OC.022

Paul Cheung and Lions Communications Inc. (appellants) v. Target Event Production Ltd. (respondent)

(A-50-10; 2010 FCA 255)

Indexed As: Target Event Production Ltd. v. Cheung et al.

Federal Court of Appeal

Nadon, Sharlow and Layden-Stevenson, JJ.A.

October 5, 2010.

Summary:

The plaintiff ran a night market (Richmond Night Market) at various locations in Richmond, B.C., from 2000 to 2007. When the lease on the location used from 2004 to 2007 (the property) expired in 2007, the plaintiff decided not to renew it because of the increased rent. The plaintiff did not find a new location and did not operate a market in 2008 and 2009. The defendants took advantage of the business opportunity vacated by the plaintiff. They leased the property and opened a night market (Lions' market). The plaintiff brought an action, alleging copyright infringement and passing off under s. 7(b) of the Trade-marks Act in connection with the defendants' operation of the Lions' market.

The Federal Court, in a decision reported at 360 F.T.R. 54, held that there had been copyright infringement and passing off in connection with the defendants' operation of the Lions' market. The court awarded damages of $15,000, issued a declaration and ordered injunctive relief. The defendants appealed. The plaintiff cross-appealed. The defendants moved for a stay of the judgment pending appeal.

The Federal Court of Appeal, per Sharlow, J.A., in a decision reported at 403 N.R. 331, granted the stay, subject to two conditions: (1) that the $15,000 paid into court would be retained pending the disposition of the appeal and cross-appeal; and (2) that the defendants use their best efforts to ensure that the steps required to have this matter made ready for hearing were completed expeditiously so that the hearing could be set down at the earliest available date.

The Federal Court of Appeal allowed the appeal in part and dismissed the cross-appeal. The court set aside the trial judge's judgment with respect to the injunctive relief and the costs award.

Copyright - Topic 4583

Infringement of copyright - Remedies - Injunctive relief - The plaintiff ran a night market (Richmond Night Market) at various locations in Richmond, B.C., from 2000 to 2007 - When the lease on the location used from 2004 to 2007 (the property) expired in 2007, the plaintiff decided not to renew it because of the increased rent - The plaintiff did not find a new location and did not operate a market in 2008 and 2009 - The defendants took advantage of the business opportunity vacated by the plaintiff - They leased the property and opened a night market (Lions' market) - The plaintiff brought an action, alleging copyright infringement and passing off under s. 7(b) of the Trade-marks Act in connection with the defendants' operation of the Lions' market - The trial judge held that there had been copyright infringement and passing off in connection with the defendants' operation of the Lions' market - The trial judge, inter alia, ordered injunctive relief - The defendants appealed, submitting that the trial judge erred by enjoining them from "operating" a market which was a substantial reproduction of the site plan because the only remedies available for copyright infringement were those provided for under the Copyright Act - The statute did not contemplate prohibitions against "use" or "operation" - The Federal Court of Appeal allowed the appeal on this issue - The plaintiff's suggestion that the injunction be amended to correspond to and reflect the relevant statutory provisions was sound - It was open to the trial judge to enjoin the defendants from further infringing activity and she did - The plaintiff should not be prejudiced because the scope of the injunction, as drafted, was too broad - The appropriate statement of injunctive relief was: "[the defendants] are enjoined from further infringing the copyright of [the plaintiff] in the Market Site Plan by reproducing it, or any substantial part thereof, in any material form whatever" - See paragraph 33.

Practice - Topic 7454

Costs - Solicitor and client costs - Entitlement to - Improper, irresponsible or unconscionable conduct - The plaintiff ran a night market (Richmond Night Market) at various locations in Richmond, B.C., from 2000 to 2007 - When the lease on the location used from 2004 to 2007 (the property) expired in 2007, the plaintiff decided not to renew it because of the increased rent - The plaintiff did not find a new location and did not operate a market in 2008 and 2009 - The defendants took advantage of the business opportunity vacated by the plaintiff - They leased the property and opened a night market (Lions' market) - The plaintiff brought an action, alleging copyright infringement and passing off under s. 7(b) of the Trade-marks Act in connection with the defendants' operation of the Lions' market - The trial judge held that there had been copyright infringement and passing off in connection with the defendants' operation of the Lions' market and awarded solicitor and client costs to the plaintiff - The defendants appealed the costs award - The Federal Court of Appeal allowed the appeal on this issue - The trial judge did not provide any explanation for awarding solicitor-and-client costs - Although certain conduct on the part of the defendants was described as "sleazy", the same conduct was not found to be unlawful - There was no reference in the trial judge's reasons to any reprehensible, scandalous or outrageous conduct - Further, the record did not disclose any conduct that appeared to reach that threshold - A number of the plaintiff's allegations were not made out at trial - Moreover, the trial judge concluded that the corporate plaintiff's president was not credible in a number of respects - These observations and the lack of any specific findings on the issue of costs rendered the characterization of the plaintiffs as an innocent party, for the purpose of awarding costs, wholly inappropriate - See paragraphs 34 to 39.

Trademarks, Names and Designs - Topic 5

Trademarks - General - Trademarks - What constitutes - The plaintiff ran a night market (Richmond Night Market) at various locations in Richmond, B.C., from 2000 to 2007 - When the lease on the location used from 2004 to 2007 (the property) expired in 2007, the plaintiff decided not to renew it because of the increased rent - The plaintiff did not find a new location and did not operate a market in 2008 and 2009 - The defendants took advantage of the business opportunity vacated by the plaintiff - They leased the property and opened a night market (Lions' market) - The plaintiff brought an action, alleging passing off under s. 7(b) of the Trade-marks Act - The trial judge held that there had been passing off in connection with the defendants' operation of the Lions' market - The plaintiff asserted that because the trial judge found "enormous goodwill" associated with its marks, it was unreasonable for her to later conclude that the marks lost their distinctiveness once the plaintiff failed to open a night market in 2009 - The trial judge also found that the plaintiff's marks were "inherently weak" and their "acquired distinctiveness was not … durable" - The Federal Court of Appeal rejected the assertion - Determining whether a trademark had lost its distinctiveness was a finding of fact - Moreover, it had long been understood that a trademark could lose distinctiveness from disuse or abandonment - The trial judge did not commit any palpable and overriding error in finding that the marks had lost their distinctiveness by 2009 - See paragraphs 22 and 23.

Trademarks, Names and Designs - Topic 265

Trademarks - What trademarks registrable - Distinctive marks - General - [See Trademarks, Names and Designs - Topic 5 ].

Trademarks, Names and Designs - Topic 3068

Trademarks - Unfair competition - Passing off - The plaintiff ran a night market (Richmond Night Market) at various locations in Richmond, B.C., from 2000 to 2007 - When the lease on the location used from 2004 to 2007 (the property) expired in 2007, the plaintiff decided not to renew it because of the increased rent - The plaintiff did not find a new location and did not operate a market in 2008 and 2009 - The defendants took advantage of the business opportunity vacated by the plaintiff - They leased the property and opened a night market (Lions' market) - The plaintiff brought an action, alleging passing off under s. 7(b) of the Trade-marks Act - The trial judge held that there had been passing off in connection with the defendants' operation of the Lions' market - The defendants appealed, asserting that the trial judge exceeded her jurisdiction in respect of the passing off claim - The Federal Court of Appeal dismissed the appeal - The trial judge's extensive reasons demonstrated that she found the plaintiff's marks to be valid trademarks only after a careful review and consideration of the evidence - Her conclusion as to the existence of those trademarks did not disclose any palpable and overriding error - The trial judge then analyzed whether the plaintiff had established the requisite elements of its s. 7(b) claim - In so doing, she considered the relevant factual context, the plaintiff's collateral documents, the defendants' website, and the defendants' communications with neighbouring businesses - In spite of the trial judge's passing references to copyright concepts or other activities irrelevant to a trademark analysis, when read in totality, the judge's reasons revealed an analysis that was properly focussed on the plaintiff's valid and enforceable marks - Her decision did not disclose any error warranting the court's intervention - See paragraphs 19 to 21.

Trademarks, Names and Designs - Topic 3068

Trademarks - Unfair competition - Passing off - The plaintiff ran a night market (Richmond Night Market) at various locations in Richmond, B.C., from 2000 to 2007 - When the lease on the location used from 2004 to 2007 (the property) expired in 2007, the plaintiff decided not to renew it because of the increased rent - The plaintiff did not find a new location and did not operate a market in 2008 and 2009 - The defendants took advantage of the business opportunity vacated by the plaintiff - They leased the property and opened a night market (Lions' market) - The plaintiff brought an action, alleging passing off under s. 7(b) of the Trade-marks Act - The trial judge held that there had been passing off in connection with the defendants' operation of the Lions' market - The defendants appealed, asserting that the plaintiff failed to demonstrate the damage component of the test for passing off and the trial judge erred in finding that passing off had been established - The defendants maintained that the trial judge's findings did not satisfy the damage component of the test because there was no actual damage in 2008 and the trial judge's inference about potential damage was an improper application of the legal test - The Federal Court of Appeal dismissed the appeal - It was not necessary to address the question of potential damage to dispose of the issue because the court was satisfied that the plaintiff suffered actual damages - Use of an owner's trademark could cause the owner to suffer an actual loss of control over its mark, despite the owner's absence from the relevant market - Such loss was sufficient to ground the third component of the tripartite test - The trial judge's reasons, read in totality, demonstrated that such damage was established at trial - There was no palpable and overriding error in the trial judge's conclusion that the plaintiff suffered damage sufficient to satisfy the relevant legal test - See paragraphs 24 to 28.

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 17].

Elders Grain Co. et al. v. Ship Ralph Misener et al., [2005] 3 F.C.R. 367; 334 N.R. 1 (F.C.A.), refd to. [para. 18].

BMW Canada Inc. et al. v. Nissan Canada Inc. (2007), 380 N.R. 147; 60 C.P.R.(4th) 181; 2007 FCA 255, refd to. [para. 20].

Auld Phillips Ltd. v. Suzanne's Inc. (2005), 345 N.R. 338; 46 C.P.R.(4th) 81; 2005 FCA 429, refd to. [para. 23].

General Motors Corp. v. Bellows, [1949] S.C.R. 678; 10 C.P.R. 101, refd to. [para. 23].

Remo Imports Ltd. v. Jaguar Cars Ltd. et al., [2008] 2 F.C.R. 132; 367 N.R. 177, refd to. [para. 24].

Kirkbi AG et al. v. Ritvik Holdings Inc. et al., [2005] 3 S.C.R. 302; 341 N.R. 234; 2005 SCC 65, refd to. [para. 24].

PharmaCommunications Holdings Inc. v. Avencia International Inc. et al. (2009), 392 N.R. 197; 79 C.P.R.(4th) 460; 2009 FCA 144, refd to. [para. 24].

2 for 1 Subs Ltd. v. Ventresca et al., [2006] O.T.C. 350; 48 C.P.R.(4th) 311; 17 B.L.R.(4th) 179 (Sup. Ct.), refd to. [para. 26].

Orkin Exterminating Co. v. Pestco of Canada Ltd. and Valder (1985), 10 O.A.C. 14; 50 O.R.(2d) 726 (C.A.), refd to. [para. 27].

Walt Disney Productions v. Triple Five Corp. et al. (1994), 149 A.R. 112; 63 W.A.C. 112; 17 Alta. L.R.(3d) 225 (C.A.), refd to. [para. 27].

Enterprise Car and Truck Rentals Ltd. v. Enterprises Rent-A-Car Co. et al., [1996] 2 F.C. 694; 109 F.T.R. 185 (T.D.), affd. (1998), 223 N.R. 114; 79 C.P.R.(3d) 45 (F.C.A.), refd to. [para. 27].

Mentmore Manufacturing Co. and Rotary Pen Corp. v. National Merchandise Manufacturing Co. (1978), 22 N.R. 161; 89 D.L.R.(3d) 195; 40 C.P.R.(2d) 164 (F.C.A.), refd to. [para. 31].

Apotex Inc. and Novopharm Ltd. v. Wellcome Foundation Ltd. (1998), 159 F.T.R. 233; 84 C.P.R.(3d) 303 (T.D.), affd. (2001), 270 N.R. 304 (F.C.A.), refd to. [para. 34].

Young v. Young et al., [1993] 4 S.C.R. 3; 160 N.R. 1; 34 B.C.A.C. 161; 56 W.A.C. 161, refd to. [para. 35].

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 35].

Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, refd to. [para. 35].

Statutes Noticed:

Trade-marks Act, R.S.C. 1985, c. T-13, sect. 7(b) [para. 19].

Counsel:

Howard P. Knopf and Katherine Ducey, for the appellants;

Paul Smith, for the respondent.

Solicitors of Record:

Macera & Jarzyna LLP and Campbell, Froh, May and Rice LLP, for the appellants;

Smiths IP, for the respondent.

This appeal and cross-appeal were heard on September 16, 2010, at Toronto, Ontario, by Nadon, Sharlow and Layden-Stevenson, JJ.A., of the Federal Court of Appeal. The following judgment of the Court of Appeal was delivered by Layden-Stevenson, J.A., at Ottawa, Ontario, on October 5, 2010.