Federal Court Decisions

     T-2676-96

BETWEEN:

     SHERWIN-WILLIAMS DIVERSIFIED BRANDS INC.

     Plaintiff

     - and -

     HARRY I. KUPERSCHMIDT, THE KUPERSCHMIDT GROUP INC.

     and GROW CONSUMER PRODUCTS INC.

     Defendants

     REASONS FOR ORDER

ROULEAU, J.

     This is an application by the plaintiff for an interlocutory injunction restraining the defendants from using the trade-marks "FAMILY CHOICE" and "GROW CONSUMER PRODUCTS" which are alleged to infringe the plaintiff's registered trade-marks.

     The plaintiff, a United States corporation, carries on the business of selling cleaners, detergents and paint. The defendant Harry I. Kuperschmidt is the president of the two corporate defendants, The Kuperschmidt Group Inc. and Grow Consumer Products Inc..

     On February 29, 1996, Sherwin-Williams purchased the assets of Grow Consumer Products Inc. and its subsidiary Cello Corporation. One of the largest accounts being serviced by Grow Consumer Products Inc. and Cello Corporation was Price Costco in Canada. The assets which the plaintiff purchased included the following four trade marks registered in Canada for use with laundry detergent:

FAMILY TREE, No. TMA 420,861, registered December 10, 1993;

FAMILY SELECT, No. TMA 433,463, registered September 16, 1994;

FAMILY SUPREME & DESIGN, No. TMA 433,111, registered September 9, 1994; and,

FAMILY SUPREME, No. TMA 432,412, registered August 26, 1994.

     Prior to the plaintiff's purchase of Grow Consumer Products, Mr. Kuperschmidt was Vice President, Sales and Marketing of the consumer products division of Cello Corporation. He was responsible for maintaining the relationships between Cello Corp. and its biggest clients, Sam's Club, Dollar General and Price Costco. Mr. Kuperschmidt had approximately fifteen people reporting to him and was responsible for all of the marketing efforts of the consumer product division of Cello Corp.

     After Sherwin-Williams purchased Grow Consumer products however, Mr. Kuperschmidt was demoted from his position of Vice President and his functions were reduced to those of a product manager. This turn of events led him to believe that the plaintiff's plans did not likely include any serious role for him and he began contemplating self-employment. Accordingly, on April 19, 1996, he filed an application with the Canadian Trade Marks Office to register, in the name of The Kuperschmidt Group Inc, the trade-mark FAMILY CLASSIC, to be used in association with liquid and powder laundry detergents.

     On May 7, 1996, Mr. Kuperschmidt gave notice to the plaintiff that he was terminating his employment effective May 20, 1996. He then commenced operating The Kuperschmidt Group Inc.. On July 11, 1996, the defendant Grow Consumer Products Inc. filed an application to register the trade-mark GROW CONSUMER PRODUCTS. Mr. Kuperschmidt, as President of The Kuperschmidt Group Inc., assigned the FAMILY CLASSIC trade-mark application from The Kuperschmidt Group to Grow Consumer Products Inc.

     In June of 1996, the plaintiff became aware that Price Costco was not satisfied with the quality of its product and that the account was open to bids for a new supplier. During the course of the summer, the defendants secured the patronage of the Price Costco and in September of 1996, Price Costco awarded the contract to The Kuperschmidt Group Inc. The defendant subsequently began supplying Price Costco with laundry detergent in the early part of 1997.

     After the plaintiff learned that it had lost the account, it made further inquiries of Price Costco to see if the situation could be rectified and it could regain the account. However, Sherwin-Williams was advised on October 28, 1996, that Price Costco would not reconsider.

     The following day, the plaintiff commenced proceedings in the U.S. District Court seeking a temporary restraining order against the defendants. The plaintiff's Motion was initially successful, as it was presented without notice to the defendants. A Temporary Restraining Order and Order to Show Cause were issued by the United States District Court for the District of Maryland on October 29, 1996. The Order to Show Cause required the defendants Mr. Kuperschmidt and The Kuperschmidt Group Inc. to appear on November 8, 1996, to explain why an injunction should not issue.

     At the hearing held on November 8, the plaintiff failed to persuade the District Court that it had a prima facie case, that the balance of convenience was in its favour, or that it could demonstrate a likelihood of success on the merits. Accordingly, the Court refused to renew the Temporary Restraining Order. The plaintiff continued in its efforts to obtain an injunction but after a full hearing completed on November 13, 1996, the U.S. District Court concluded as follows:

I am not satisfied that there is no reason at all to assume that the plaintiff can't compete for the Price Costco business and win that business. The evidence is very thin with respect to what that situation really is at this point. There is nothing before me that indicates that is not a possibility.

And with respect to what Mr. Kuperschmidt specifically did with regard to misappropriating a trade secret is in my view speculative on the record we have here. Suspicious at best. Looking at the Blackelder standards, it appears to me that the irreparable harm issue is one that Mr. Kuperschmidt has the most concern with. I think there is merit. There would appear to me to be merit to the argument that he is completely out of business, not that he doesn't have the talent to do something else.

What he has been doing from many, many years would appear to be lost. It does not appear to me that the harm to the plaintiff, although perhaps irreparable as has been argued, is as harmful as it would be to the defendant in this situation. Going beyond that to the probability of success on the merits, I would have to find a strong probability of success on the merits. I am simply not satisfied by the evidence that has been presented that there is a strong probability of success.

    

     On December 6, 1996, the plaintiff filed a Statement of Claim in this Court alleging that the defendants have directed public attention to their wares, service or business, or have threatened to do so in such a way, as to cause, or be likely to cause, confusion in Canada. Moreover, the plaintiff contends that the defendants have passed off or threatened to pass off their wares, services and business as those of the plaintiff. Finally, the plaintiff submits that the defendants have used or threatened to use trade-marks, which are confusing with the registered FAMILY trade-marks of the plaintiff, in a manner likely to depreciate the value of the trade-marks' goodwill.

     This motion for an interlocutory injunction, filed by the plaintiff on February 10, 1997, seeks the following relief:

1. an interlocutory injunction restraining each of the defendants from:

a. infringing the exclusive rights of the plaintiff under the registered trade-marks FAMILY TREE, FAMILY SUPREME, FAMILY SUPREME & Design and FAMILY SELECT;

b. manufacturing, selling, distributing or otherwise dealing with laundry detergent and other cleaning products bearing trade-marks which are confusing with the plaintiff's FAMILY trade-marks;

c. using the trade-marks FAMILY CLASSIC and GROW CONSUMER PRODUCTS;

d. directing public attention to their wares in such a manner as to cause, or be likely to cause, confusion in Canada between the plaintiffs wares and those of the defendants;

e. passing-off their wares for those of the plaintiff by using a trade-mark which is confusingly similar to the plaintiff's FAMILY trade-marks; and,

f. carrying on business under the name Grow Consumer Products Inc.

     I am dismissing the plaintiff's application for the following reasons.

     First, I am not satisfied on the evidence that there is a serious issue to be tried here. The plaintiff's principle argument is that the defendants trade-marks FAMILY CLASSIC and GROW CONSUMER PRODUCTS are confusing with its own. However, GROW CONSUMER PRODUCTS has not been used by any of the defendants in association with wares sold in Canada. Furthermore, the Licence Agreement between the plaintiff and Grow Group, Inc., whereby the plaintiff acquired the right to use the word GROW, has now terminated.

     With respect to the word FAMILY, the plaintiff has again failed to adduce any evidence whatsoever to support its allegation of confusion. The word "family" is the only point of similarity between the competing trade-marks. However, the use of the word "family" in conjunction with another word is relatively common, especially for consumer goods. No additional meaning can be attached to this word as a result of the use or promotion of the wares by the plaintiff, nor has the plaintiff adduced evidence of any specific or secondary meaning attaching to the word other than its common designation. Sherwin-Williams's marks are characterized by a commonplace word to which a laudatory description is attached. They are not distinctive and they are not in use.

     More significantly however is the obvious differences between the marks as demonstrated by the physical evidence. On the defendants' labelling the predominant word is FAMILY and it is clearly indicated that The Kuperschmidt Group Inc. is the source of the product. On the contrary, the plaintiff's label does not feature the word FAMILY at all nor does it indicate that the plaintiff is the source of the product. Furthermore, the lettering of the marks is different as are the colours.

     Finally, the plaintiff's reliance on residual goodwill is sheer speculation. No attempt has been made by the plaintiff to show that it made any effort to use its marks FAMILY SELECT or FAMILY SUPREME with any retailer other than Price Costco. Any suggestion that the defendants trade-marks confused Price Costco is simply not tenable.

     Taken as a whole therefore, the evidence does not disclose any likelihood of confusion arising because of the defendants' trade-marks. There is no suggestion that any Price Costco customers have been confused and there is no evidence of confusion elsewhere, because there is no activity elsewhere. Nor is there evidence of any attempt to use the alleged residual goodwill.

     Second, since an injunction is an extraordinary and discretionary remedy, the plaintiff must demonstrate clearly that in its absence, it will suffer irreparable harm. There is no indication of that here. To date, the only loss suffered by the plaintiff is the loss of Price Costco as a client. Clearly, that loss could be quantified in monetary terms.

     Finally, there is no question that the balance of convenience favours the defendants. The defendants are using the mark FAMILY CLASSIC, while none of the plaintiff's marks are in use. An injunction forbidding the use of FAMILY CLASSIC would require the defendants to rename, redesign and resubmit the product, but would do nothing to assist the plaintiff, who has taken no action in any event to market its products.

     In my view, the plaintiff's action has little, if anything, to do with trade-marks. Sherwin-Williams is simply unhappy that Price Costco was dissatisfied with its product and took its business to the defendants instead. However, there is no question that as of June 13, 1996, the plaintiff was well aware that Price Costco was not satisfied with its product. Indeed, the plaintiff was given two months before bids were accepted by Price Costco and a new formula suggested before the contract was awarded to the defendants.

     Nor is there any merit to the plaintiff's argument that Mr. Kuperschmidt took advantage of, or breached any of his obligations, as a former employee. The only evidence in that regard are self-serving statements from employees of the plaintiff which do not contain any definite proof but are based merely on suspicions and innuendo.

     For these reasons, the application is dismissed. Costs to the defendants in any event of the cause.

JUDGE

OTTAWA, Ontario

June 24, 1997