T-173-89
Pater International Automotive Franchising In
corporated (Plaintiff)
v.
Mister Mechanic Inc. and René LeTendre
(Defendants)
INDEXED AS: PATER INTERNATIONAL AUTOMOTIVE FRANCHIS
ING INC. V. MISTER MECHANIC INC. (T.D.)
Trial Division, Jerome A.C.J.—Toronto, March
13; Ottawa, November 7, 1989.
Trade marks — Practice — Action for expungement of
trade mark and for finding director of infringing corporation
personally liable — Motion to strike statement of claim —
Even though criteria to establish personal liability of director
fairly stringent, absence of precise allegations in statement of
claim not justifying striking action against director — Conse
quences of fact plaintiff's mark not registered matter of law
better dealt with at trial — Inappropriate to decide here
whether protection of certification provisions extend to general
entrepreneur as opposed to independent association.
In the main action, the plaintiff sought the expungement of
the defendants' trade mark "Mister Mechanic" and design on
the ground that it created confusion with its "Master Mechan
ic" and design certification mark, and a finding of liability
against the defendant LeTendre personally. This was an
application under Rule 419 to strike certain portions of the
statement of claim and to strike the entire action as against the
defendant, LeTendre, a director of the defendant corporation.
Held, the application should be dismissed.
The standard to be applied in motions of this kind was set out
in Operation Dismantle: is it plain and obvious that the action
cannot succeed? On this basis, the action against LeTendre
should not be struck. Although a finding of personal liability
against the director of a company requires evidence of a
deliberate and wilful pursuit of a course of conduct constituting
infringement, and although the statement of claim contains no
such allegations, it is far from obvious that the language of the
statement of claim fails to establish the basis for a finding of
liability against LeTendre. Nor would the Court strike mere
surplus statements in an attack under Rule 419(1)(b) where no
prejudice was established.
The defendants also argued that since the plaintiffs mark
was not registered, the plaintiff could not prevent its use by
unlicensed persons as per subsection 23(3), nor was an action
under paragraph 7(b) possible. It was inappropriate to decide
on this motion whether the protection of the certification
provisions extended to the general entrepreneur as opposed to
an independent association. Since the arguments raised herein
regarding paragraph 7(b) and subsection 23(3) had not been
examined in the case relied upon by the defendants, the plain
tiffs right to have these questions determined should not be
denied.
The issue of whether Master Mechanic could be validly
licensed to use an unregistered certification mark pursuant to
subsection 23(2), or whether such marks are subject to the
provisions relating to permitted use of registered trade marks
was primarily a question of law which should be decided at
trial.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Federal Court Rules, C.R.C., c. 663, RR. 408,
419(1)(a),(b),(c),(d)•
Trade-marks Act, R.S.C., 1985, c. T-13, ss. 7(b),
16(3)(a), 18(1), 23(2),(3).
CASES JUDICIALLY CONSIDERED
APPLIED:
Operation Dismantle Inc. et al. v. The Queen et al.,
[1985] I S.C.R. 441; Mentmore Manufacturing Co., Ltd.
et al. v. National Merchandising Manufacturing Co. Inc.
et al. (1978), 89 D.L.R. (3d) 195; 40 C.P.R. (2d) 164
(F.C.A.); C. Evans & Sons Ltd. v. Spritebrand Ltd.,
[1985] F.S.R. 267 (Eng. C.A.); Belanger Inc. v.
Keglonada Investments Ltd. (1986), 1 F.T.R. 238; 8
C.P.R. (3d) 557; 8 C.I.P.R. 123 (F.C.T.D.).
CONSIDERED:
Life Underwriters Association of Canada v. Provincial
Association of Quebec Life Underwriters, [ 1989] 1 F.C.
570; (1988), 20 F.T.R. 274; 22 C.P.R. (3d) 1; 33
C.C.L.I. 62 (T.D.); Asbjorn Horgard A/S v. Gibbs/Nor-
tac Industries Ltd., [1987] 3 F.C. 544; (1987), 38 D.L.R.
(4th) 544; 80 N.R. 9; 14 C.P.R. (3d) 314; 13 C.I.P.R.
263 (C.A.); Wool (The) Bureau of Canada, Ltd. v.
Queenswear (Canada) Ltd. (1980), 47 C.P.R. (2d) II
(F.C.T.D.).
AUTHORS CITED
Fox, Harold G. Canadian Law of Trade Marks and
Unfair Competition. 3rd ed. Toronto: The Carswell
Company Limited, 1972.
COUNSEL:
Daniel Hitchcock for plaintiff.
Gunars Gaikis for defendants.
SOLICITORS:
Riches, McKenzie & Herbert, Toronto, for
plaintiff.
Smart & Biggar, Toronto, for defendants.
The following are the reasons for order ren
dered in English by
JEROME A.C.J.: This application to strike cer
tain portions of the statement of claim and to
strike the entire action as against the defendant
LeTendre came on for hearing in Toronto, Ontario
on March 13, 1989. The plaintiff brings this action
for expungement of the defendants' trade mark
"Mister mechanic" and design pursuant to para
graphs 7(b), 16(3)(a) and subsection 18(1) of the
Trade-marks Act, R.S.C., 1985, c. T-13. During
the course of argument, counsel withdrew the
original attack on paragraph 24 of the statement
of claim.
The relevant portions of the statement of claim
are paragraphs 3, 5, 17, 18, 20-23 and 25-34:
3. The Defendant René LeTendre ("LeTendre") is an
individual residing in Ontario. The Defendant LeTendre owns,
operates and directs the Defendant Mister Mechanic.
5. The Defendant Mister Mechanic opposed the registration of
the Plaintiffs MASTER MECHANIC & Design certification mark
by filing a Statement of Opposition on January 22, 1988
relying on several grounds of opposition. One of those grounds
is that the Defendant alleges the Plaintiffs certification mark is
not registerable pursuant to section 12(1)(d) of the Trade
Marks Act because it is confusing with the Defendant's MISTER
MECHANIC & Design trade mark which was registered under
registration number 334,518 on the Canadian Trade Marks
Register on November 20, 1987. A printed copy of Registration
334,518 showing the Defendants' MISTER MECHANIC & Design
trade mark is attached hereto as Appendix "A".
17. Since 1986, The Master Mechanic displays whenever possi
ble the MASTER MECHANIC & Design mark in the colours
orange and blue/purple.
18. The telephone number of The Master Mechanic has been
since 1985 and continues to be 629-1222.
20. By reason of the facts pleaded herein, the Plaintiff had
acquired prior to 1987 in Canada, and particularly in Ontario,
and was and is rightfully entitled to the benefit of the reputa
tion and goodwill in association with the MASTER MECHANIC
& Design mark.
21. By reason of the facts pleaded herein, the Plaintiff has the
exclusive right to the use of and to license others to use,
throughout Canada, the MASTER MECHANIC & Design mark.
22. Some time in about January 1987, knowing that The
Master Mechanic was performing and advertising services of
repairing, maintaining and servicing motorized and non-motor
ized vehicles in association with the mark MASTER MECHANIC
& Design, the Defendant Mister Mechanic began at 3443
Wolfedale Road, Mississauga, Ontario performing and adver
tising to the general public services of automobile repair and
maintenance in association with the trade mark MISTER
MECHANIC and has continued to do so.
23. Some time in late 1988, knowing that The Master Mechan
ic was performing and advertising the services of repairing,
maintaining and servicing motorized and non-motorized vehi
cles in association with the mark MASTER MECHANIC &
Design, the Defendant Mister Mechanic began at 3443 Wol-
fedale Road, Mississauga, Ontario performing and advertising
to the general public services of automobile repair and mainte
nance in association with the trade mark MISTER MECHANIC &
Design and has continued to do so.
25. The Defendant LeTendre, knowing that The Master
Mechanic was performing and advertising the services of
repairing, maintaining and servicing motorized and non-motor
ized vehicles in association with the mark MASTER MECHANIC
& Design, authorized and directed the Defendant Mister
Mechanic to perform and advertise to the general public its
services in association with the trade marks MISTER MECHANIC
and MISTER MECHANIC & Design.
26. Some time in about 1987, knowing that the telephone
number of The Master Mechanic was 629-1222, the Defendant
Mister Mechanic specifically requested and received the tele
phone number 897-1222 and has continued to use that tele
phone number.
27. Some time in 1987, knowing the Master Mechanic dis
played the mark MASTER MECHANIC & Design in the colours
orange and blue/purple, the Defendant Mister Mechanic began
using the colors orange and blue/purple in association with its
trade mark MISTER MECHANIC & Design and in association
with its business and has continued to do so.
28. Knowing that the telephone number of The Master
Mechanic was 629-1222, and knowing that The Master
Mechanic used the colours orange and blue/purple in associa
tion with its business and in association with the mark MASTER
MECHANIC & Design, the Defendant LeTendre authorized,
ordered and directed the Defendant Mister Mechanic to
request and use the telephone number 897-1222, and to adopt
and use the colours orange and blue/purple in association with
its business and the trade mark M ISTER MECHANIC & Design.
29. By reason of the facts pleaded herein, the Defendant
Mister Mechanic has directed public attention to its services
and business in such a way to cause or be likely to cause
confusion in Canada, at the time it commenced to so direct
attention to them and continuously since then, between its
services and business and the services and business of the
Plaintiff and its licensee The Master Mechanic, and the
Defendant Mister Mechanic knew at the time of such directing
that such directing would cause or be likely to cause confusion.
30. By reason of the facts pleaded herein, the Defendant
LeTendre has authorized, ordered and directed the Defendant
Mister Mechanic to direct public attention as identified above.
31. By reason of the facts pleaded herein, the Defendant
Mister Mechanic has wrongfully directed public attention to its
services and business contrary to section 7(b) of the Trade
Marks act.
32. By reason of the facts pleaded herein, the Defendant
LeTendre has wrongfully ordered, authorized and directed the
Defendant Mister Mechanic to wrongfully direct public atten
tion to its services and business contrary to section 7(b) of the
Trade Marks Act.
33. By reason of the Defendants' wrongful acts as pleaded
herein, the Plaintiff has suffered and will continue to suffer loss
and damage, including damage to its reputation and goodwill;
and each of the Defendants has made and will continue to
make a profit.
34. Each of the Defendants threatens to continue its wrongful
acts as pleaded herein unless restrained by this Honourable
Court.
The Federal Court Rules, [C.R.C., c. 663]
relied on by the defendants are Rules 408 and
419(1)(a),(b),(c) and (d):
Rule 408. (1) Every pleading must contain a precise
statement of the material facts on which the party
pleading relies.
(2) Without limiting the generality of paragraph (1), the
effect of any document or the purport of any conversation
referred to in the pleading must, to the extent that it is
material, be briefly stated, and the precise words of the docu
ment or conversation should not be stated, except in so far as
those words are themselves material.
(3) A party need not plead any fact if it is presumed by law
to be true or as to which the burden of proof lies on the other
party (e.g. consideration for a bill of exchange), unless the
other party has specifically denied it in his pleading.
(4) A statement that a thing has been done or that an event
has occurred, being a thing or event the doing or occurrence of
which, as the case may be, constitutes a condition precedent
necessary for the case of a party, is to be implied in his
pleading.
(5) Whenever it is material to allege notice to any person of
any fact, matter or thing, it shall be sufficient to allege such
notice as a fact unless the form or precise terms of such notice
be material.
Rule 419. (I) The Court may at any stage of an action
order any pleading or anything in any pleading to be
struck out, with or without leave to amend, on the
ground that
(a) it discloses no reasonable cause of action or defence, as
the case may be,
(b) it is immaterial or redundant,
(c) it is scandalous, frivolous or vexatious,
(d) it may prejudice, embarrass or delay the fair trial of the
action,
In the decision of the Supreme Court of Canada
in Operation Dismantle Inc. et al. v. The Queen et
al., [1985] 1 S.C.R. 441, the standard in motions
of this sort was clearly stated at pages 486 and 487
by Madam Justice Wilson:
The law then would appear to be clear. The facts pleaded are
to be taken as proved. When so taken, the question is do they
disclose a reasonable cause of action, i.e. a cause of action
"with some chance of success" (Drummond-Jackson v. British
Medical Association, [1970] 1 All E.R. 1094) or, as Le Dain J.
put it in Dowson v. Government of Canada (1981), 37 N.R.
127 (F.C.A.), at p. 138, is it "plain and obvious that the action
cannot succeed?"
It is convenient to deal first with the action
against the defendant LeTendre. The attack is
based on the standard to be applied in any finding
of personal liability for infringement on a director
or officer of a corporation. As counsel for the
defendants so ably argued, Mentmore Manufac
turing Co., Ltd. et al. v. National Merchandising
Manufacturing Co. Inc. et al. (1978), 89 D.L.R.
(3d) 195; 40 C.P.R. (2d) 164 (F.C.A.) expresses
the principle that personal liability requires evi
dence of more than simply running the infringing
company. There must be a question of a deliber
ate, wilful pursuit of a course of conduct constitut
ing infringement. Since the statement of claim
contains no such allegations it should be struck.
However, the Court of Appeal went on to say in
Mentmore, supra, at page 205 D.L.R.:
The precise formulation of the appropriate test is obviously a
difficult one. Room must be left for a broad appreciation of the
circumstances of each case to determine whether as a matter of
policy they call for personal liability.
This flexibility was approved by the English Court
of Appeal in C. Evans & Sons Ltd. v. Spritebrand
Ltd., [1985] F.S.R. 267, at page 280, where Lord
Justice Slade commented:
The Federal Court of Appeal of Canada in Mentmore
eschewed any attempt to give a precise definition of the nature
and extent of participation in the tortious act which will render
a director who has directed or authorised it personally liable as
a joint tortfeasor. As it rightly observed, this is an "elusive
question," a "question of fact to be decided on the circum
stances of each case."
It is far from plain and obvious that the lan
guage of the statement of claim fails to establish
the basis for a finding of liability against Mr.
LeTendre personally. I am not satisfied that the
action against him in his personal capacity should
be struck.
Turning to the attack on the statement of claim,
the defendants advance four arguments, two of
which can be dealt with quickly. They are essen
tially that the chronology of the opposition pro
ceedings is irrelevant as is the extensive reference
throughout the pleading to use of telephone num
bers or colours. While the statement of claim does
make extensive reference to deliberate acts to use
telephone numbers and colours as close as possible
to those of the plaintiff, it quite properly does not
allege any property in the plaintiff in them. Bear
ing in mind that the relief sought here is equitable
or discretionary in nature, a good deal of latitude
must be permitted with respect to facts that may
establish bad faith on the part of a defendant.
In Belanger Inc. v. Keglonada Investments Ltd.
(1986), 1 F.T.R. 238; 8 C.P.R. (3d) 557; 8
C.I.P.R. 123 (F.C.T.D.) the Federal Court refused
to strike mere surplus statements in an attack
pursuant to Rule 419(1)(b) where no prejudice
was established and I think that is the appropriate
disposition here.
The submission with respect to paragraphs
20-23, 29, 31-34 and 40(b)-(g) is that since the
plaintiff's mark is not registered, the plaintiff
cannot prevent its use by unlicensed persons as per
subsection 23(3), nor is an action under paragraph
7(b) possible. These sections read 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;
23....
(3) The owner of a registered certification mark may pre
vent its use by unlicensed persons or in association with any
wares or services in respect of which the mark is registered but
to which the licence does not extend.
As authority for these arguments the defendants
rely on a decision of my colleague Mr. Justice
Dubé: Life Underwriters Association of Canada v.
Provincial Association of Quebec Life Underwrit
ers, [1989] 1 F.C. 570; (1988), 20 F.T.R. 274; 22
C.P.R. (3d) 1; 33 C.C.L.I. 62 (T.D.). The reason
ing in that case is that as a certification mark is
not a creature of the common law, it cannot
benefit from any protection inherent in the
common law that is available for other trade
marks but is limited to the protection offered in
the Act which in the instance of subsection 23(3)
requires registration. As regards paragraph 7(b)
litigation, Mr. Justice Dubé held on page 585 F.C.:
Following the judgment of the Supreme Court of Canada in
MacDonald et al. v. Vapor Canada Ltd., ([1977] 2 S.C.R. 134)
it is now established that this Court does not have jurisdiction
to make a finding of passing off under this paragraph without
the support of appropriate legislation. The federal legislation in
the matter, namely the Trade Marks Act, provides no right of
action for an unregistered certification mark. Such a mark
therefore cannot benefit from the protection provided by para
graph 7(b) of the Act.
The defendants further point out that if it is
found that the plaintiff has no cause of action
under paragraph 7(b) and subsection 23(3), the
plaintiff will be required to commence proceedings
again by way of notice of motion since expunge -
ment relief alone is not available on a statement of
claim.
The plaintiff argues that Life Underwriters was
wrongly decided and notes that an appeal from
that decision has been instituted (F.C.A. No.
A-744-88). Counsel refers to Asbjorn Horgard
AIS v. Gibbs/Nortac Industries Ltd., [1987] 3
F.C. 544; (1987), 38 D.L.R. (4th) 544; 80 N.R. 9;
14 C.P.R. (3d) 314; 13 C.I.P.R. 263 (C.A.) for the
principle that both registered and unregistered
trade marks are protected under paragraph 7(b).
He contends that since section 2 of the Trade
marks Act defines "trade mark" to include certifi
cation mark, pursuant to the reasoning in Asbjorn,
unregistered certification marks are protected by
paragraph 7(b). He defends this interpretation by
arguing that paragraph 7(b) provides a basic pro
tection for all owners of registered or unregistered
trade marks, including certification marks, while
subsection 23(3) offers a broader scope of protec
tion open only to owners of registered certification
marks. In the plaintiff's view, this section will
apply not only to wares and services bearing the
mark which are in actual use by the licensees, but
also to wares and services not presently in use by
licensees, but which are within the scope of the
registration and in use by third parties. The plain
tiff finds support for this interpreted in the final
words of subsection 23(3): "wares or services in
respect of which the mark is registered but to
which the license does not extend".
In Wool (The) Bureau of Canada, Ltd. v.
Queenswear (Canada) Ltd. (1980), 47 C.P.R. (2d)
11 (F.C.T.D.), Mr. Justice Cattanach outlines at
page 15 the manner in which certification marks
have been traditionally used:
It is defined in s. 2 of the Act. Basically it is the mark of
persons or associations who examine and certify goods and
services as being of a defined standard with respect to quality,
produced under defined working conditions by a defined class
of persons or in a defined area. It is tantamount to the
conferment of a seal of approval and would naturally enhance
the sale of a product so identified in accordance with the good
repute acquired by the certification mark.
The purpose of the certification mark is to distinguish the
wares so marked from those which are not of the defined
standard with respect to the matters specified in the definition
in s. 2.
By virtue of s. 23 a certification mark can be adopted and
registered only by a person or association not engaged in
dealing in the wares with which the mark is associated. There
fore a registered owner of a certification cannot be the user
thereof in the ordinarily accepted sense. The registered owner
may license others to use the trade mark when satisfied that the
licensee deals in wares which meet the defined standards.
The plaintiff's success in this litigation depends
upon an interpretation broader than the one
expressed above. But surely, it would be inappro
priate for me to attempt to decide on this motion
whether the protection of the certification provi
sions extend to the general entrepreneur as
opposed to an independent association. In any
case, bearing in mind that the Life Underwriter
decision is under appeal and that the arguments
presented by plaintiff's counsel here regarding
paragraph 7(b) and subsection 23(3) were not put
before Mr. Justice Dubé, I am loathe to deny the
plaintiff's right to have these questions deter
mined.
Finally, with respect to paragraphs 17, 18, 26
and 27 of the statement of claim, the defendants
contend that subsection 23(2) of the Trade-marks
Act cannot provide the plaintiff authority to valid
ly license others to use the mark in the absence of
registration. But similarly, the issue of whether
Master Mechanic could be validly licensed to use
an unregistered certification mark pursuant to
subsection 23(2), or whether such marks are sub
ject to the provisions relating to permitted use of
registered trade marks is primarily a question of
law which should be decided upon proper factual
basis in the more comprehensive setting of a trial.
The following comment at pages 277-278 in
Canadian Law of Trade Marks and Unfair Com
petition by Harold G. Fox indicates that certifica
tion mark licensing is handled differently than that
of trade mark licensing:
Sections 19 and 20 of the Trade Marks Act emphasize the fact
that a trade mark is intended to denote that the goods or
services come from one source and from one source only, and
provisions are contained in the Act to deal with exceptional
cases, such as those arising under permitted use and the like, or
in certification cases, where a mark is in fact used by a number
of different dealers.
In addition, Cattanach J. in Wool (The) Bureau
of Canada, Ltd. v. Queenswear (Canada) Ltd.,
supra, interprets subsection 23(2) as not being
limited in scope to the situation described by the
defendant. On page 15, he states that "by virtue of
ss. 23(2) use of a certification mark by a licensee
shall be deemed to be use by the owner" and
places no restrictions on the scope or purpose of
the use.
For these reasons, the application to strike the
whole or any portions of the statement of claim
must fail. Costs in the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.