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T-3011-78
Valle's Steak House (Plaintiff) v.
Gérard Tessier and Adrien Tessier, carrying on business as "Valle's Steak House Restaurant of Montreal Reg'd" (Defendants)
Trial Division, Marceau J.—Montreal, June 9 and 10; Ottawa, July 14, 1980.
Trade marks — Infringement and passing off — Plaintiff an American corporation operating a chain of restaurants in the U.S. under the name "Valle's Steak House" or "Valle's", is registered owner in Canada of the trade mark "Valle's" — Defendants, operators of a restaurant in Montreal identifying their establishment as "Valle's" since November 1972 Whether plaintiff has made its mark known in Canada prior to November 1972 — Whether plaintiffs trade mark "well known in Canada" — Trade Marks Act, R.S.C. 1970, c. T-10, ss. 3, 5, 7(b),(c),(d), 14(1), 16(1), 19, 53, 55.
This is an action for infringement and passing off whereby plaintiff, an American corporation operating, since 1950 a chain of restaurants in the United States under the name Valle's Steak House or Valle's, seeks to obtain relief by injunction and the recovery of damages. In 1973, plaintiff submitted to the Registrar of Trade Marks of Canada an application to register its trade mark Valle's, mentioning that it had made its mark known in Canada since 1955. This applica tion was approved and, since 1977, plaintiff is the registered owner in Canada of the trade mark Valle's. The defendants have been operating a restaurant in Montreal, since November 1972, under the name of Valle's Steak House Restaurant of Montreal and identifying their establishment as Valle's exactly as in plaintiffs trade mark, notwithstanding the dismissal, by the Registrar of Trade Marks, of their application to register the mark Valle's filed in November 1972. One of the funda mental principles involved in order to decide on the validity of the respective claims of the parties states that the "making known" in Canada of a trade mark used abroad is equivalent to its use in Canada. The question is whether the plaintiff had made its mark known in Canada prior to November 1972 pursuant to section 5 of the Trade Marks Act and whether its trade mark was sufficiently "well known in Canada" to comply with the requirements of that section.
Held, the action is allowed. Section 5 is peremptory in its application and the provision it contains is one of substance and not only of evidence. The purpose of the section is to make clear what the expression "make known" a trade mark means within the Act. The presence after the words "is deemed" and "est reputée" of the words "only if' and "seulement si" does not admit of any other interpretation. The suggestion by plaintiff
that section 5 could be interpreted as designed simply to give evidentiary effect to the means referred to in it, without thereby excluding the validity of other means which might be used to make a trade mark known thus fails. Within the specific limits of that section, the evidence here was quite sufficient to demon strate that, before November 1972, plaintiff had advertised its services in connection with its mark in several publications which, although American, are circulated in Canada and in a number of radio or television broadcasts received in Canada. It is clear that the means of making the mark known in Canada, provided for by section 5, were fully used here. However, in order to be considered "well known in Canada", it is not enough for a mark to be known merely within the boundaries of some locality; it must be known in "a substantial part" of the country. Here, the plaintiff's trade mark was known in the eastern Canadian provinces, and in Quebec: clearly, these constitute a sufficiently "substantive" part of the country to meet the requirements of section 5.
Robert C. Wian Enterprises, Inc. v. Mady [1965] 2 Ex.C.R. 3, considered. Marineland Inc. v. Marine Won derland [1974] 2 F.C. 558, considered. Williamson Candy Co. v. W. J. Crothers Co. [1924] Ex.C.R. 183, considered. E. & J. Gallo Winery v. Andres Wines Ltd. [1976] 2 F.C. 3, referred to.
ACTION. COUNSEL:
R. Hughes and K. McKay for plaintiff. E. Gagnon for defendants.
SOLICITORS:
D. F. Sim, Q.C., Toronto, for plaintiff.
E. Gagnon, Montreal, for defendants.
The following is the English version zof the reasons for judgment rendered by
MARCEAU J.: This action for infringement of a trade mark and passing off, which seeks to obtain relief by injunction and the recovery of damages, has like all actions of this type given rise to somewhat lengthy evidence. However, its difficul ties do not consist so much .in assessing the tes timony and determining the facts as in the defini tion of the rules and principles of law applicable to the case at bar and the consequences that are to be derived therefrom in determining the value of the parties' respective claims. This may be seen from a review of the fundamental facts and an analysis of the principal allegations in the written pleading.
Plaintiff is an American corporation operating a chain of restaurants in the United States. It was incorporated in 1950 to carry on the business founded some ten years earlier in the State of Maine by one Donald Vallé; it has grown steadily to the point where it now operates more than thirty restaurants scattered throughout the East Coast States from Maine to Florida. It has been a public company since 1968, and its turnover of over $60,000,000 puts it among the largest businesses of the kind in the United States. Plaintiff has always operated under its present name of Valle's Steak House, and has always used in its advertis ing, in identifying its premises and in promoting its services—on which it has spent considerable amounts over a period of years—the trade marks Valle's or Valle's Steak House, with the word "Valle's" written in the Gothic old English manner. In fact, it has been the owner since 1969 of five trade marks registered in the United States, all having to do with the word "Valle's", the last registration, No. 869,532, dated May 13, 1969, being precisely that of the word "Valle's", and in connection obviously with restaurant services.
In June 1973, although it had never operated a restaurant in Canada, plaintiff submitted to the Registrar of Trade Marks of Canada an applica tion to register its trade mark Valle's. It naturally maintained that its mark, registered in the United States and used by it for several years, was not without distinctive character within the meaning of section 14(1) of the Trade Marks Act (R.S.C. 1970, c. T-10),' and it mentioned that it had made its mark known in Canada since 1955. It took four
' 14. (1) Notwithstanding section 12, a trade mark that the applicant or his predecessor in title has caused to be duly registered in his country of origin is registrable if, in Canada,
(a) it is not confusing with a registered trade mark;
(b) it is not without distinctive character, having regard to all the circumstances of the case including the length of time during which it has been used in any country;
(c) it is not contrary to morality or public order or of such a nature as to deceive the public; or
(d) it is not a trade mark of which the adoption is prohibited by section 9 or 10.
years to compile the evidence required by the Registrar and its application was finally approved. Since July 8, 1977, plaintiff has been the regis tered owner in Canada (registration No. 221,667) of the trade mark Valle's in connection with res taurant services. However, its restaurants are still all located in the United States.
Defendants Tessier are brothers. In November 1972, the two brothers had the idea of operating a restaurant in Montreal known as Valle's Steak House Restaurant of Montreal. In accordance with article 1834 of the Civil Code of the Province of Quebec and the Companies and Partnerships Declaration Act (R.S.Q. 1964, c. 272), they caused a declaration to be registered by the Pro- thonotary of the Superior Court for the district of Montreal to the effect that they were henceforth doing business together under the name and firm name of Valle's Steak House Restaurant of Mon- treal Reg'd, and opened their restaurant in a building on St. Catherine Street in the downtown area. 2 A few days later, on November 8, 1972, through an agent, they submitted to the Registrar of Trade Marks an application to register the mark Valle's, with Gothic lettering, which they altered shortly afterwards, believing that this would make it more acceptable, to Valle's Steak House, but the Registrar promptly refused, first because the mark, consisting primarily of a family name, was not registrable (s. 12(1)(a) of the Act), and secondly because the applicants did not appear to be the persons entitled to the registration under the terms of an application by an American com pany (obviously plaintiff, as we have seen) con cerning a similar mark. Defendants had to with draw their application, but they did not think they were thereby required to change anything in their operation. Since November 1972, therefore, defendants have operated their restaurant in Mon- treal under the name of Valle's Steak House Restaurant of Montreal, and identified their es tablishment using the name Valle's exactly as in plaintiffs trade mark, and they intend to continue doing so unless they are prevented by an order of the Court.
2 In fact the partnership initially included a third partner, who left after a year.
Plaintiff instituted its action in June 1978, a few months after it obtained registration of its mark in Canada. In it, it claimed the reliefs which this Court is empowered to grant in accordance with sections 53 and 55 of the Trade Marks Act, 3 and put forward two grounds for relief. First, it main tained that since 1972 defendants have infringed paragraphs (b), (c) and (d) of section 7 of the Act, which in prohibiting certain acts of unfair compe tition, including primarily that known in the common law as "passing off', state the following:
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;
(c) pass off other wares or services as and for those ordered or requested;
(d) make use, in association with wares or services, of any description that is false in a material respect and likely to mislead the public as to
(i) the character, quality, quantity or composition,
(ii) the geographical origin, or
(iii) the mode of the manufacture, production or
performance
of such wares or services;
It naturally also maintains, since its mark is now registered in Canada, that since 1977 defendants have been infringing the exclusive right conferred on it by section 19 of the Act in the strictest terms:
19. Subject to sections 21, 31 and 67, the registration of a trade mark in respect of any wares or services, unless shown to be invalid, gives to the owner the exclusive right to the use throughout Canada of such trade mark in respect of such wares or services.
3 53. Where it is made to appear to a court of competent jurisdiction that any act has been done contrary to this Act, the court may make any such order as the circumstances require including provision for relief by way of injunction and the recovery of damages or profits, and may give directions with respect to the disposition of any offending wares, packages, labels and advertising material and of any dies used in connec tion therewith.
55. The Federal Court of Canada has jurisdiction to enter tain any action or proceeding for the enforcement of any of the provisions of this Act or of any right or remedy conferred or defined thereby.
However, defendants deny that either of the two causes of action cited can be maintained against them. First, they argue section 7 does not apply because (here I am taking the gist of the allega tions of the defence, leaving aside several proposi tions which are manifestly irrelevant and inappli cable) plaintiff, a foreign company doing business exclusively in the United States, cannot claim an exclusive right to the use in Canada of the word "Valle's" as a name or trade mark; further, because when they registered their firm name and began using their name, the word "Valle's" was not registered as a trade mark in Canada, and was not used by anyone providing restaurant services in Canada, so that the adoption of this name by them could not have had the effect of creating confusion in the public mind between their business and that of anyone else doing business in Canada. Second, they argue that the registration of the trade mark Valle's in 1977 on plaintiff's behalf was unlawful and should be declared invalid (as indicated in their counterclaim), for not only was the mark not registrable as it was a family name, as the Regis trar mentioned in rejecting their own application, but in any case plaintiff was not the person en titled to obtain registration of it, since it could create confusion with the business name they had themselves been using for a long time.
The basic facts are thus relatively straightfor ward and the two causes of action clearly estab lished. What is important is to determine the applicable principles.
In my view, in order to decide on the validity of the respective claims of the parties, it is necessary to start from three fundamental principles. The first general principle is so obvious that it would be superfluous to state it, if it were not for the fact that from reading the written defence the Court has the impression that defendants have forgotten it: a foreign company, even if it is doing business abroad exclusively, may nonetheless acquire rights in Canada and may maintain them in Canadian courts just as any Canadian company may do. The second, which relates to the area we are consider ing, is also obvious, but here it appears to be
plaintiff which has not taken it into account, assuming that it could not react against the use of its mark in Canada without its consent before having formally had it registered in Canada. The existence of a trade mark in law does not in any way depend on its registration, and the rights to a trade mark are acquired by adoption and use of the mark in relation to goods or services, not by its registration; registration confirms the owner's rights to exclusive use of its mark throughout Canada and facilitates their legal recognition by simplifying the evidence required of it, but the rights themselves exist prior to registration. The third principle I should note is that which Parlia ment included in our law to give effect to obliga tions which Canada has undertaken pursuant to the international agreement for protection of industrial property, and under which merely the "making known" in Canada of a trade mark used abroad is equivalent to its use in Canada. Thus, section 3 of our Trade Marks Act provides:
3. A trade mark is deemed to have been adopted by a person when he or his predecessor in title commenced to use it in Canada or to make it known in Canada or, if he or such predecessor had not previously so used it or made it known, when he or such predecessor filed an application for its registra tion in Canada.
It is apparent that the result of applying these three principles to the case at bar is that plaintiff acquired ownership rights to its trade mark in Canada, rights which Canadian courts are capable of protecting, if and, if so, as soon as it has made its mark known in Canada and so long as it did not abandon it. It follows from this that since defend ants began their operations in November 1972, the two causes of action submitted by plaintiff are valid to the extent that it shows that it had made its mark known in Canada before November 1972. If its contention in this regard is a valid one, it is clear that defendants have appropriated for pur poses of deriving profit therefrom a mark adopted by someone else in Canada, thereby clearly infringing the provisions of paragraphs (b), (c) and (d) of section 7, and it is equally clear that the registration which it obtained in 1977 is unassail able since its mark, which has been used for such a
long time in the United States, had the distinctive character required by section 14, and that it is the person entitled to obtain registration thereof in Canada as it had made the mark known before defendants copied it (s. 16(1)). °
Accordingly, everything turns on the question of whether plaintiff had made its mark known in Canada prior to November 1972, in connection with the restaurant services which it offered in the United States. The Registrar has already replied in the affirmative, but his findings are disputed and the question must therefore be re-examined.
Section 5 of the Trade Marks Act reads as follows:
5. A trade mark is deemed to be made known in Canada by a person only if it is used by such person in a country of the Union, other than Canada, in association with wares or ser vices, and
(a) such wares are distributed in association with it in Canada, or
(b) such 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 such wares or services, or
(ii) radio broadcasts, as defined in the Radio Act, ordinar ily received in Canada by potential dealers in or users of such wares or services,
and it has become well known in Canada by reason of such distribution or advertising.
It may be worth considering the scope of this section for a moment. Counsel for the plaintiff suggested that the use of the words "is deemed" in the English version was typical of a rule of evi-
16. (1) Any applicant who has filed an application in accordance with section 29 for registration of a trade mark that is registrable and that he or his predecessor in title has used in Canada or made known in Canada in association with wares or services is entitled, subject to section 37, to secure its registra tion in respect of such wares or services, unless at the date on which he or his predecessor in title first so used it or made it known it was confusing with
(a) a trade mark that had been previously used in Canada or made known in Canada by any other person;
(b) a trade mark in respect of which an application for registration had been previously filed in Canada by any other person; or
(c) a trade name that had been previously used in Canada by any other person.
dente, and that the provision could be interpreted as designed simply to give evidentiary effect to the means referred to in it, without thereby excluding the validity of other means which might be used to make a trade mark known. Based on this sugges tion, he submitted evidence to the effect that a great many Canadians had probably visited one or more of plaintiffs restaurants or seen billboards relating to them on trips to the United States. I do not accept this suggestion. In my view, the section is peremptory in its application, and the provision it contains is one of substance and not only of evidence. The purpose of the section is to make clear what the expression "make known" a trade mark means within the Act. The presence after the words "is deemed" and "est réputée" of the words "only if" and "seulement si" does not admit of any other interpretation. As such, the rule appears to me to be quite understandable: can it reasonably be admitted that by setting up billboards abroad or by serving Canadian travellers in its establish ments abroad a foreign firm can be regarded as having made itself known in Canada? However, counsel had no need of this suggestion, which I regard as invalid. I am in fact of the opinion that within the specific limits of section 5, the evidence was quite sufficient to demonstrate that, before November 1972, plaintiff had advertised its ser vices in connection with its mark in several publi cations which, although American, are circulated in Canada (newspapers, magazines, specialized pamphlets for travellers and so on) and in a number of radio or television broadcasts received in Canada. The specific testimony, supported by several exhibits, of Marie Lise Andrée Logan, a travel agent employed by the "United States Travel Service" in Montreal, and of Daniel G. Davis III, a vice-president of plaintiff but also an undisputed expert on advertising, are especially conclusive in this regard, and could be cited in their entirety, if it were necessary to do so. Coun sel for the defendants devoted considerable energy to finding affirmations of hearsay in the state ments of these two witnesses, but they were experts and these affirmations could only be used to impugn the credibility of their opinions (E. & J. Gallo Winery v. Andres Wines Ltd. [ 1976] 2 F.C. 3 (F.C.A.) per Thurlow J. (as he then was)), and I do not consider that this credibility can be disputed.
I therefore have no doubt that these means of making the mark known in Canada, provided for by section 5, were fully used here. However, one difficulty remains. While the evidence as presented may readily be used as a basis for concluding that plaintiffs trade mark was known in the eastern Canadian provinces, and in particular in Quebec, it does not permit to say that it was known else where in Canada, and the question may then arise as to whether, in spite of this, it was sufficiently "well known in Canada" to comply fully with the requirements of section 5. I do not regard this as a serious difficulty, as I do not think this question can be given any but an affirmative answer. I know that in Robert C. Wian Enterprises, Inc. v. Mady [1965] 2 Ex.C.R. 3, and in Marineland Inc. v. Marine Wonderland [1974] 2 F.C. 558, my brother Cattanach J. had observations which, taken out of context, leave the impression that, in his opinion, for a trade mark to be regarded as "well known in Canada" within the meaning of section 5 it must be known throughout the country. However, I believe that, put back into their con text, these observations do not have the scope that might at first sight be ascribed to them. As I understand it, the opinion of my brother is that, in order to be considered "well known in Canada", it is not enough for a mark to be known merely within the boundaries of some locality (such as the city of Windsor in Ontario, in the case of Robert C. Wian Enterprises, Inc.), it must be known in "a substantial part" of the country. I am entirely in agreement with this opinion, but I do not think that one can go beyond that, without incurring the risk of giving section 5 an interpretation which would make almost illusory the protection which the legislator has attempted to give to foreign trade marks made known in Canada. Clearly the eastern Canadian provinces, and even Quebec by itself, since Quebec is in question here, constitute a sufficiently "substantial" part of the country to meet the requirements of section 5.
I am thus of the opinion that plaintiff has clearly demonstrated that its trade mark was well known in Canada within the meaning of the Act when defendants began using it, making it their name and firm name, in 1972. In fact, it is mani festly for this reason, I think, that defendants wanted simply to copy it, as they hoped in doing so to benefit from the attraction it could have for Canadians as well as for American tourists likely to associate their establishment with the American chain. I am firmly persuaded that they acted in this way in full knowledge of the facts from the outset. Only one of the defendants testified, and he maintained that the name Valle's had been sug gested to him and his brother, by one Desroches from whom they had obtained the site, and who had undertaken to provide physical facilities for the premises, but that they were not themselves familiar with the American chain. I place more reliance on the statement by the agent whom defendants had authorized to deal with the Regis trar of Trade Marks, who, obliged to testify, stated that his clients had been attracted by the "Ameri- can concept" and simply wanted to use it. Since no one contends (and in any event, the evidence would not support such contention) that plaintiff had at that time or could have since abandoned its mark, plaintiff presented the evidence which was required of it in order to claim the protection of the Act, and the actions of defendants, which could only have been prejudicial to it,' will be sanctioned as requested. Such behaviour in these circumstances cannot be tolerated, either for the welfare of the public in general or for that of businessmen in particular. The observations made by Maclean J. in upholding the action to invalidate and withdraw a registration in Williamson Candy Co. v. W J. Crothers Co. [ 1924] Ex.C.R. 183, observations cited with approval by Thurlow J. (as he then was) in handing down the judgment of the
5 The confusion is obvious, since the wording was copied outright, and the damages must then be presumed (La Société Anonyme Des Ancien Établissements Panhard et Levassor v. Panhard-Levassor Motor Company, Ld. (1901) 18 R.P.C. 405 (Ch.D.), per Farwell J. at pp. 408-409; Sheraton Corporation of America v. Sheraton Motels Ltd. [1964] R.P.C. 202 (Ch.D), per Buckley J. at p. 203; Alain Bernardin et Compagnie v. Pavilion Properties Limited [1967] R.P.C. 581 (Ch.D.), per Pennycuick J. at pp. 582, 584-588; Globelegance B.V. v. Sar- kissian [1974] R.P.C. 603 (Ch.D.), per Templeman J. at pp. 604-7, 609-614).
Federal Court in E. & J. Gallo Winery v. Andres Wines Ltd. [1976] 2 F.C. 3, [at pages 16-17], should be repeated here:
The use of trade-marks was adopted to distinguish one person's goods from those of another, on the market, and to prevent one person selling his goods as those of another. The system was designed to encourage honest trading, and the protection of the buying public. One may safely say that our Trade-Marks Act was not enacted to encourage in Canada the adoption of foreign registered marks, even if there were no user by the foreign registrant here. That would cause confusion and deception, just the thing that trade-marks were supposed to avoid, and it would be a fetter upon trade, another thing quite foreign to the purposes of trade-marks. Trade-mark legislation was designed as much for the benefit of the public, as for the users of trade-marks.
If such a practice were knowingly permitted by all countries, the use of trade-marks would end in hopeless confusion and bring about a result which trade-marks were originally sup posed to avoid. Happily the tendency is always towards the protection of marks registered in another country. In fact a convention exists today, to which many important countries are parties, which provides for a system of international registra tion. In so far as possible each country should I think respect the trade-marks of the other country, or else international trade and public interests would suffer. I think knowledge of foreign registration and user, of a mark applied to the same class of goods, as in this case, and particularly where the foreign user is in a contiguous country using the same language, and between which travel is so easy, and advertising matter so freely circu lates, should in most cases be a bar to registration knowingly, of that mark here. This should be particularly true where, as in this case, the plaintiff's advertising, circulating substantially in Canada, might very likely mislead the public into thinking that the defendant's goods were the same as the advertised goods of the plaintiff. The conspicuous presentation of the word mark on the label would influence the eye to that conclusion, notwith standing the less conspicuous but clearly printed matter on the label, indicating the name of the maker of the goods. That rule would impose no hardship on any person. Conceivably there might be instances when this principle might well be ignored. The case of innocent user and registration is quite a different thing altogether and need not here be considered. Again if the plaintiff had neglected to apply for registration here for a long number of years after his registration in the United States possibly a different view might be taken of the case. That might be construed as a deliberate abandonment of this market, or of the mark in this market. I do not think that contention can yet fairly be made. The defendant registered the mark, in Canada, within four months, after the plaintiff registered in the United States.
In view of the facts before me I am of the opinion that the registration in question was improperly made. The defendant was not the proprietor of the mark, and was not entitled to register the same and it should be expunged. Neither was the
defendant the first to use the mark to his knowledge. The discretion placed in the Minister by section 11, and now in this court, may well be exercised against the defendant's registra tion, and I am of the opinion that the defendant's registration is calculated to deceive or mislead the public, and for that reason also, the defendant's registered mark should be expunged. (Emphasis added.)
An injunction will accordingly be issued concur rently with an order to defendants to destroy the labels, menus, place mats or other advertising material capable of contravening the injunction.
I do not think it would be proper to leave plaintiff with the option of requiring a statement of account of the profits which may have been made by defendants from their unlawful acts, but it is certainly entitled to be compensated for the damage which it may have sustained as a result of the loss of exclusive control of its mark during past years and the detrimental effect which this loss of exclusive control may have had on its reputation. As was agreed before the trial, the question of the quantum of such damages will be the subject of a reference under Rule 500 of the General Rules of the Court.
The counterclaim will naturally be dismissed.
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