Date: 19980211
CORAM: PRATTE J.A.
ROBERTSON J.A.
GRAY D.J.
Docket: A-240-96
(T-1078-93)
BETWEEN:
ENTERPRISE CAR AND TRUCK RENTALS LTD.,
ENTERPRISE CAR AND TRUCK RENTALS (SCARBOROUGH) LTD.,
HORIZON CAR AND TRUCK RENTALS (CANADA) LTD.,
720074 ONTARIO LIMITED,
DISCOUNT CAR & TRUCK RENTALS LTD.,
DISCOUNT CAR & TRUCK RENTALS (NORTH YORK) INC.,
2313-7292 QUEBEC INC.,
2631-6935 QUEBEC INC.,
819854 ONTARIO LIMITED,
401127 B.C. LTD.
Appellants
- and -
ENTERPRISE RENT-A-CAR COMPANY
and
ENTERPRISE RENT-A-CAR LIMITED
Respondents
A N D
Docket: A-241-96
(T-397-93)
BETWEEN:
ENTERPRISE CAR AND TRUCK RENTALS LIMITED
Appellant
- and -
ENTERPRISE RENT-A-CAR COMPANY and
100932 ONTARIO LIMITED c.o.b. as
ENTERPRISE RENT-A-CAR
Respondents
Heard at Toronto, Ontario, on Monday, December 15 and Tuesday, December 16, 1997.
Judgment delivered at Ottawa, Ontario, on Wednesday, February 11, 1998.
REASONS FOR JUDGMENT BY: PRATTE J.A.
CONCURRED IN BY: ROBERTSON J.A.
GRAY D.J.
Date: 19980211
CORAM: PRATTE J.A.
ROBERTSON J.A.
GRAY D.J.
Docket: A-240-96
(T-1078-93)
BETWEEN:
ENTERPRISE CAR AND TRUCK RENTALS LTD.,
ENTERPRISE CAR AND TRUCK RENTALS (SCARBOROUGH) LTD.,
HORIZON CAR AND TRUCK RENTALS (CANADA) LTD.,
720074 ONTARIO LIMITED,
DISCOUNT CAR & TRUCK RENTALS LTD.,
DISCOUNT CAR & TRUCK RENTALS (NORTH YORK) INC.,
2313-7292 QUEBEC INC.,
2631-6935 QUEBEC INC.,
819854 ONTARIO LIMITED,
401127 B.C. LTD.
Appellants
- and -
ENTERPRISE RENT-A-CAR COMPANY
and
ENTERPRISE RENT-A-CAR LIMITED
Respondents
A N D
Docket: A-241-96
(T-397-93)
BETWEEN:
ENTERPRISE CAR AND TRUCK RENTALS LIMITED
Appellant
- and -
ENTERPRISE RENT-A-CAR COMPANY and
100932 ONTARIO LIMITED c.o.b. as
ENTERPRISE RENT-A-CAR
Respondents
REASONS FOR JUDGMENT
PRATTE J.A.
[1] These appeals were heard together. They are directed against a judgment of the Trial Division disposing of two actions for "passing off" under paragraph 7(b) of the Trade-marks Act1 (R.S. 1985, c. T-13) relating to the use of the unregistered trade mark "Enterprise" in association with car and truck rental and leasing services. One of these actions was brought by an American company (which had been using that trade mark in the U.S. for many years) and its recently constituted Canadian subsidiary against a group of related Canadian companies which had commenced to use the same mark in Canada in association with the same services. The plaintiffs in that action (I will refer to them as "Enterprise U.S.") alleged that the defendants ("Enterprise Canada") had violated paragraph 7(b) by using the mark "Enterprise" to the plaintiff's detriment. In the other action, the roles were reversed: Enterprise Canada was the plaintiff and alleged that Enterprise U.S. had infringed paragraph 7(b) by using the mark "Enterprise" in Canada. Enterprise Canada also alleged that the defendant had violated paragraph 7(a) of the Trade-marks Act2 by making misleading statements tending to discredit its business. Both plaintiffs sought injunctions and damages. Before Trial, it was decided that any question as to the damages would be the subject of a reference (rule 480).
[2] The Trial judge, whose reasons for judgment are now reported,3 found that when Enterprise Canada commenced to use the mark "Enterprise" in Canada, that mark was already known by many Canadians as the mark used by Enterprise U.S. in association with its services. He concluded that Enterprise U.S., in spite of the fact that it had never done business in Canada at the time, nevertheless had a sufficient reputation in this country to succeed in its action. On the other hand, he found that Enterprise Canada, when Enterprise U.S. had started to use its mark in Canada, had not yet used the mark in a manner that would generate a significant amount of goodwill. He therefore ruled in favour of Enterprise U.S., allowed its action and dismissed Enterprise Canada's claim under paragraph 7(b); he also dismissed Enterprise Canada's claim under paragraph 7(a) since, in his view, the statements and behaviour of which Enterprise Canada was complaining were inconsequential. It is against this judgment, which allowed Enterprise U.S.'s action and dismissed Enterprise Canada's action, that these appeals are brought.
[3] The main argument put forward on behalf of the appellants is based on sections 3, 4 and 5 of the Trade-marks Act.4
[4] According to the appellants, in an action brought in the Federal Court under paragraph 7(b), the plaintiff who complains of the use by the defendant of a trade-mark similar to his cannot succeed unless he proves that, before the defendant commenced to use that mark, he himself had adopted it in accordance with sections 3, 4 and 5. As it is clear, says counsel, that Enterprise U.S. did not meet that condition, its action ought to have been dismissed.
[5] Counsel for the appellants concedes that, under the common law, a plaintiff in a passing off action need not prove that he has used his mark in Canada or that he has made it well known in Canada.5 He says, however, that the situation is different when the action is brought in the Federal Court which has no jurisdiction to hear and decide an action for passing off based on the common law. It is now established that paragraph 7(b) is constitutionally valid only insofar as it protects trade-marks.6 In spite of the generality of its terms, that provision must, therefore, be read as referring only to the protection of trade-marks, registered or unregistered. The plaintiff, in an action under paragraph 7(b) must, therefore, prove that he "owns" a trade-mark that is in need of protection. It is well known that a trade-mark is "acquired by adoption and use".7 As sections 3 and following prescribe how a mark is deemed to be adopted for the purposes of the Act, it follows, according to counsel, that the plaintiff in an action for passing off under paragraph 7(b) of the Act must necessarily prove that he is deemed by section 3 to have adopted the trade-mark in question.
[6] There is, in my opinion, an obvious error in that reasoning.
[7] Section 3, 4 and 5 of the Trade-Marks Act do not, as counsel for the appellants assumes, prescribe substantive rules governing the acquisition and use of trade-marks. These sections are grouped with sections 2 and 6 under the heading "Interpretation". Section 2 contains definitions. Sections 3, 4 and 5 are "deeming" clauses which simply ascribe a special meaning to certain phrases.8 These three sections must be applied in interpreting the sections of the Act where those phrases are used. Otherwise, they have no role to play.
[8] The appellants' second submission was that the judge of first instance erred in deciding that Enterprise Canada's use of the trade-mark at the time Enterprise U.S. commenced to use it in Canada had not generated a significant amount of goodwill. The easy answer to that argument is that it challenges a finding of fact which is certainly not manifestly wrong.
[9] Counsel for the appellants also said that the Trial judge had misconstrued the evidence of Mr. Singer, the person in control of Enterprise Canada and its main witness who, contrary to what the judge said, had not "denied knowledge of Enterprise U.S. in 1989". Assuming, for the sake of argument, this criticism to be well founded, this error would not affect the correctness of the judge's assessment of Mr. Singer's evidence who obviously tried to conceal the real reasons which had prompted him to adopt the mark "Enterprise".
[10] Finally, counsel for the appellants submitted that the Trial judge should have found that Enterprise U.S. had infringed paragraph 7(b) of the Trade-Marks Act by "making false statements tending to discredit the business...or services of" Enterprise Canada. Counsel said that, as a consequence, the judge, in view of Enterprise U.S.'s illegal behaviour, should have refused to grant the injunction it was seeking to obtain and directed a reference for the assessment of the damages suffered by Enterprise Canada.
[11] Enterprise U.S. is said to have violated section 7(a) in two ways. The first one involves an encounter between a Mr. Nevedal and a Mr. Brugger which the Trial judge describes in the following terms:
| There was evidence surrounding an encounter between Mr. Max Brugger and Mr. Jim Nevedal. Mr. Brugger is the Vice-President of William K. Miller Insurance Adjusters and, since 1989, he has been a member of the Ontario Insurance Adjusters Association. In 1993, Mr. Nevedal, who had been with Enterprise U.S. for between one and one half and two years, was the Branch Rental Manager for Enterprise U.S.'s Windsor location. In 1993, Mr. Brugger attended a golf tournament sponsored by the Windsor chapter of the Ontario Insurance Adjusters Association. Mr. Nevedal was running a hot dot concession after the ninth hole; the concession booth bore the ENTERPRISE name. Mr. Brugger, who was aware of the existence of an Enterprise Canada location in Scarborough but was surprised to see the ENTERPRISE name in Windsor, approached Mr. Nevedal specifically because of his curiosity about the presence of Enterprise. During the course of what Mr. Brugger described as a casual conversation, Mr. Nevedal explained to Mr. Brugger that he was not representing the same Enterprise company as that which was in Scarborough; more particularly, Mr. Nevedal explained to Mr. Brugger that he represented Enterprise U.S. Mr. Brugger gave evidence that Mr. Nevedal informed him that the ENTERPRISE name was being used illegally in Toronto and that Enterprise U.S. had "some kind of court order to stop it". [...] Mr. Brugger stated that this conversation did not make any difference to the manner in which he carried out his business relationship with either Discount or Enterprise Canada. Furthermore, there was no evidence that senior management of Enterprise U.S. authorized Mr. Nevedal to make this statement. |
[12] Enterprise U.S. would also have infringed paragraph 7(a) by using the " designation in association with the "E" logo it was using and, occasionally, with the mark "Enterprise".
[13] The Trial judge rejected these allegations. He found that there had been no violation of paragraph 7(a) since neither Mr. Nevedal's declaration nor the use of the " designation constituted "statements tending to discredit the business, wares or services of a competitor". He also found that Mr. Nevedal's declaration and the use of the " designation did not disqualify Enterprise U.S. from obtaining an injunction. In my opinion, he was clearly right.
[14] I would dismiss both appeals with costs here and in the Trial Division.
"Louis Pratte"
J.A.
"I agree.
J. Robertson, J.A."
"I agree.
W. Gibson Gray, D.J."
FEDERAL COURT OF APPEAL
Date: 19980211
Docket: A-240-96
(T-1078-93)
BETWEEN:
ENTERPRISE CAR AND TRUCK RENTALS LTD.,
ENTERPRISE CAR AND TRUCK RENTALS
(SCARBOROUGH) LTD.,
HORIZON CAR AND TRUCK RENTALS (CANADA) LTD.,
720074 ONTARIO LIMITED,
DISCOUNT CAR & TRUCK RENTALS LTD.,
DISCOUNT CAR & TRUCK RENTALS (NORTH YORK) INC.,
2313-7292 QUEBEC INC.,
2631-6935 QUEBEC INC.,
819854 ONTARIO LIMITED,
401127 B.C. LTD.
Appellants
- and -
ENTERPRISE RENT-A-CAR COMPANY
and
ENTERPRISE RENT-A-CAR LIMITED
Respondents
A N D
Docket: A-241-96
(T-397-93)
BETWEEN:
ENTERPRISE CAR AND TRUCK RENTALS LIMITED
Appellant
- and -
ENTERPRISE RENT-A-CAR COMPANY and
100932 ONTARIO LIMITED c.o.b. as
ENTERPRISE RENT-A-CAR
Respondents
REASONS FOR JUDGMENT
__________________
1 Paragraph 7(b) reads as follows:
7. No person shall ... ( b) direct public attention to his wares, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his wares, services or business and the wares, services or business of another; ...
2 Paragraph 7(a) of the Trade-marks Act reads thus:
7. No person shall ( a) make a false or misleading statement tending to discredit the business, wares or services of a competitor; ...
3 [1996] 2 F.C. 694.
4 These sections read as follows:
3. A trade-mark is deemed to have been adopted by a person when that person or his predecessor in title commenced to use it in Canada or to make it known in Canada or, if that person or his predecessor had not previously so used it or made it known, when that person or his predecessor filed an application for its registration in Canada.
4. (1) A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.
(2) A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.
(3) A trade-mark that is marked in Canada on wares or on the packages in which they are contained is, when the wares are exported from Canada, deemed to be used in Canada in association with those wares.
5. A trade-mark is deemed to be made known in Canada by a person only if it is used by that person in a country of the Union, other than Canada, in association with wares or services, and ( a) the wares are distributed in association with it in Canada, or ( b) the wares or services are advertised in association with it in (i) any printed publication circulated in Canada in the ordinary course of commerce among potential dealers in or users of the wares or services, or (ii) radio broadcasts ordinarily received in Canada by potential dealers in or users of the wares or services, and it has become well known in Canada by reason of the distribution or advertising.
5 See Orkin Exterminating Co. Inc. v. Pestco of Canada Ltd. (1985), 5 C.P.R. (3d) 433 (Ont. C.A.).
6 See Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd. et al, [1987] 3 F.C. 544.
7 Fox, The Canadian Law of Trade Marks and Unfair Competition, 3rd ed. (Toronto: Carswell, 1972), pages 48 & foll.
8 "The purpose of any "deeming" clause is to impose a meaning, to cause something to be taken to be different from that which it might have been in the absence of the clause," per Dickson J. in R. v. Sutherland , [1980] 2 S.C.R. 451 at 456.