Date: 20000622
Docket: T-1392-99
BETWEEN:
SALTON APPLIANCES (1985) CORP. and
JASCOR HOME PRODUCTS INC.,
| Plaintiffs, |
| - and - |
| SALTON INC., |
| Defendant |
| REASONS FOR ORDER |
DENAULT, J.
[1] The Plaintiffs are two small and privately held Canadian entities fighting against a large public American corporation over the use of the trade-marks SALTON and MAXIM. The Plaintiffs are seeking, by way of a motion, an interlocutory injunction to restrain the Defendant's use in Canada of the Plaintiffs' trade marks SALTON (No. TMA 150167) and MAXIM (No. TMA 462015).
[2] Salton Appliances (1985) Corp. (hereafter "Salton Canada") owns proprietary rights to the SALTON trade-mark in Canada. Jascor Home Products Inc. (hereafter "Jascor") owns proprietary rights to the MAXIM trade-mark in Canada. Salton Canada has been using the MAXIM trade-mark in Canada, under licence from Jascor, since June 26, 1996, in association with food grinders.
[3] The Defendant, Salton Inc., is a manufacturer and importer of small household and personal care appliances, and is the owner of the trade-marks SALTON and MAXIM in the United States. The Defendant is and has been using the words SALTON and MAXIM in association with its wares in Canada, more specifically, in association with portable appliances exported and distributed in this country.
[4] In light of the three-stage test adopted by the Supreme Court in RJR-Macdonald v. Canada (Attorney-General), [1994] 1 S.C.R. 311, to succeed in obtaining the order sought, the Plaintiffs must convince this Court: (1) that there is a serious question to be tried in this case; (2) that they will suffer irreparable harm not compensable in damages or by damages not recoverable from the other party; and (3) that the balance of convenience as between the parties favours them.
Re: the serious question issue:
[5] The Plaintiffs argue that they own two distinctive trade-marks, SALTON and MAXIM, registered in Canada, and that under Section 20 of the Trade-Marks Act, R.S.C. c. T-13, (the "Act"), there is a deemed infringement of the exclusive rights of the registered trade-mark owner if an unauthorized person employs these trade-marks to sell, distribute or advertise wares with confusing trade-marks. Therefore, the Plaintiffs submit that the use of the SALTON trade-mark on the defendant's wares, leaflets and packages is an infringement of its trade-mark in Canada.
[6] The Plaintiffs also submit that the evidence has shown illegitimate use by the Defendant of the MAXIM trade-mark in Canada in association with the George Foreman's Grill1 and in association with an electric roaster2. In addition, the Plaintiffs submit that there was no use by the Defendant of the Plaintiffs' trade-mark MAXIM prior to the filing date of the application by Jascor, on September 23, 19883. Also, they submit that there is no evidence that the MAXIM trade-mark was made known or well-known at any time in Canada prior to September 23, 1988.
[7] On the other hand, the Defendant submits that the Plaintiffs' MAXIM trade-mark registration is invalid as: (a) under sections 16 and 18 of the Act, Jascor was not the person entitled to register the trade-mark MAXIM in Canada; (b) as a result of spillover advertising in U.S. publications and on-going sales in Canada of the MAXIM brand clock, the MAXIM trade-mark is not distinctive pursuant to sections 2 and 18 of the Act4; (c) the trade-mark has been improperly registered in connection with food choppers, when the only use has been in connection with food grinders.
[8] The Defendant also submits that it is not using the trade-mark SALTON in Canada but is only using its corporate name, Salton Inc., and therefore, the legitimate trade-name use does not infringe the rights of the Plaintiffs5.
[9] At the outset of the hearing, the Court, having reviewed the file, assumed for the purposes of the interlocutory injunction that there were serious issues with respect to both marks, SALTON and MAXIM, that could only be resolved after disclosure of evidence at trial.
Re: the irreparable harm issue
[10] The Plaintiffs submit that it must be inferred from the conduct of the Defendant that the unauthorized use of the Plaintiffs' trade-marks created confusion amongst Canadian consumers, retailers and suppliers6. They further allege that the evidence of confusion amongst consumers is sufficient to demonstrate irreparable harm7.
[11] The Plaintiffs' view is that the evidence of irreparable harm is not speculative since this evidence shows that they received complaints from unsatisfied consumers with respect to the Defendant's products and that retailers have returned the Defendant's manufactured products to them. Consequently, it is the Plaintiffs' submission that their distribution network is disturbed and weakened by the Defendant's conduct. Further, the Plaintiffs note that the Defendant is stepping up its invasion on their goodwill.
[12] In short, the Plaintiffs argue that the Defendant is committed to destabilising their business by distributing and selling kitchen appliances bearing their MAXIM trade-mark. This illegal use, the Plaintiffs argue, creates confusion amongst Canadians who have known the mark for products of the same general class, entailing a loss of distinctiveness of their mark that could eventually drive them out of business.
[13] The Defendant vigorously opposes the Plaintiffs' position and submits that a finding of confusion does not necessarily establish loss of goodwill and that, even if established, a loss of goodwill does not constitute irreparable harm8. In the case at bar, the Defendant submits that the Plaintiffs have not produced actual evidence of irreparable harm.
Re: the balance of convenience issue
[14] The issue of balance of convenience was not forcefully argued at the hearing even though counsel for both parties raised the question in their respective memorandum.
[15] The Plaintiffs submitted that the Defendant could easily distribute and sell its products under different trade-marks and/or trade-names in Canada. As for them, they submitted that the loss of distinctiveness of their trade-marks and the loss of their market share constituted irreparable harm that no indemnity could repair.
[16] The Defendant underlined the fact that the Plaintiffs have refused to provide an undertaking and that they were not financially able to compensate the harm it would suffer. In contrast, the Defendant submitted that it had undertaken to keep an accounting of its sales and that, in any event, it would be able to compensate the Plaintiffs for any damage award at trial. The Defendant further submitted that the Plaintiffs have unduly delayed before bringing this matter before the Court even though negotiations between the parties had taken place since at least 1997.
Analysis
[17] As I stressed above, I am satisfied that, in the circumstances of this case, serious issues do exist with respect to both Plaintiffs' trade-marks, and particularly that the existence or non-existence of an infringement of the rights of the Plaintiffs' trade-marks is a serious issue. I also believe that the question of the invalidity of the Plaintiffs' MAXIM trade-mark raised by the defendant, as well as its submission to the effect that it is not using the SALTON trade-mark, will have to be decided at trial.
[18] However, in so far as the Plaintiffs, by this motion, are seeking an extraordinary relief, namely an interlocutory injunction, the real issue is whether the Plaintiffs, should the relief be refused, will suffer irreparable harm.
[19] This Court has not been persuaded, by clear and convincing evidence, that it will.
[20] Confusion may inevitably result from the fact that each party, being legally authorized to use the same marks in their respective country, decide to use one or both of them in the other party's country. But in a case like this one, for the Court to depart from the general rule that status quo must prevail between the parties until the decision is rendered on the merits, it must be convinced that the Plaintiffs' recoverable damages would not be an adequate remedy that the Defendant would be financially able to pay9.
[21] Evidence of irreparable harm must be clear and not speculative. In Center Ice Ltd. v. National Hockey League (1994), 53 C.P.R. (3d) 34 (F.C.A.), Heald J.A. stated at page 54:
| It cannot be inferred or implied that irreparable harm will flow wherever confusion has been shown[...] . [...] The loss of goodwill and the resulting irreparable harm cannot be inferred, it must be established by "clear evidence". |
[22] In the present case, Mr.Hugh A. Johnstone, president of Salton Canada, admitted on cross-examination that the Plaintiffs have essentially no market share whatsoever in connection with bread makers, juice extractors or fat reducing grills, i.e. the products sold by the Defendant under the trade-mark MAXIM. Mr. Johnstone also admitted on cross-examination that he never attempted to place a value on the goodwill of the SALTON or MAXIM trade-marks.
[23] On the alleged confusion that would bring loss of distinctiveness of their marks, the Plaintiffs relied on two issues, namely consumer complaint logs and the attendance at a Canadian Tire trade show. With respect to the complaint logs, Mr. Johnstone admitted on cross-examination that there is no evidence showing a loss of a single sale to his company. With respect to the Canadian Tire trade show, where he found that the Defendant had a booth under the trade-name "Maxim-Toastmaster" and where it displayed a ten foot section of the "MAXIM George Foreman Grill", Mr. Johnstone admitted, on cross-examination, that his company was not displaying the MAXIM trade-mark at the show and that he did not know of any harm that occurred as a result of the Defendant's display.
[24] In the absence of clear and compelling evidence as to whether the confusion alleged by the Plaintiffs would result in irreparable harm not compensable in damages, I am of the view that this application cannot succeed. Furthermore, in view of the fact that the Plaintiffs knew as early as June 16, 1997 about the Defendant's intention to continue using the MAXIM trade-mark in Canada, as indicated in their written response to the Plaintiffs' cease and desist letter dated May 26, 1997, I conclude that the Plaintiffs did not act diligently by initiating these proceedings on August 4, 1999, more than two years later.
[25] This application will be dismissed, with costs to follow the issue.
_________________________
Judge
Ottawa, Ontario
June 22, 2000
__________________
1 The Plaintiffs refer to an annual dealer show (the Canadian Tire Products Parade) held September 12 and 13, 1999, where the Defendant had a booth under the trade-name "Maxim-Toastmaster" and where it displayed a ten foot section of the "MAXIM George Foreman Grill".
2 The Plaintiffs refer to an half-hour infomercial aired on the Shopping Channel by the Defendant on September 13, 1999, which was broadcast across Canada featuring an electric roaster in association with the MAXIM trade-mark.
3 In the Plaintiffs' view, the appearance of MAXIM trade-mark in U.S. publications is not relevant (subsection 4(1) of the Act; Clairol International Corp. et al. v. Thomas Supply & Equipment Co. Ltd. (1968), 55 C.P.R. 176 (Ex. Ct.); Thomas J. Lipton v. HVR Co. (1995), 64 C.P.R. (3d) 552, p. 556 (T.M. Opp. Bd.)).
4 Hughes on Trade-marks , looseleaf (Toronto and Vancouver: Butterworths, 1984), p. 457 to 459-6.
6 Kun Shoulder Rest Inc. v. Joseph Kun Violin and Bow Maker Inc. (1997), 72 C.P.R. (3d) 373 (F.C.T.D.).
7 Boutique au coton Inc. v. Pant-o-Rama Inc. (1987), 17 C.P.R. (3d) 409 (F.C.T.D.).
8 Nature Co. v. Sci-Tech Educational Inc. (1992), 41 C.P.R. (3d) 359 (F.C.A.); Centre Ice Ltd. v. National Hockey League (1994), 53 C.P.R. (3d) 34 (F.C.A.); Ault Foods v. George Weston (1996), 68 C.P.R. (3d) 87 (F.C.T.D.).
9 Turbo Resources Ltd. v. Petro Canada Inc., [1989] 2 C.F. 451, at p. 473.