T-442-91
CCH Canadian Limited (Plaintiff)
v.
Butterworths Canada Ltd. and Les Publications
Dacfo Inc. (Defendants)
INDEXED AS: CCH CANADIAN LTD. V. BOTTERWORTNS
CANADA LTD. (TD.)
Trial Division, Cullen J.—Ottawa, May 9 and July
11, 1991.
Injunctions — Application for interlocutory injunction
restraining defendants from using or advertising titles in asso
ciation with tax-related publications — Contract granting
plaintiff exclusive right to publish tax service but second defen
dant retaining copyright in material published — Plaintiff ter
minating agreement and taking action against first defendant
to prevent publishing service under disputed titles — Serious
issue to be tried — Trade marks presumed valid in interlocu
tory proceedings — Copyright protection extending to title —
No irreparable harm to plaintiff if injunction refused — Bal
ance of convenience in favour of defendants — No fiduciary
relationship although second defendant's president formerly
plaintiff's lawyer.
Trade marks — Passing off — Application for interlocutory
injunction restraining publication of income tax service —
Contract between parties silent as to ownership of trade marks
in titles — Validity of trade marks irrelevant in interlocutory
proceedings — Plaintiff not making out strong case of invalid
ity — Passing off action by plaintiff based on Trade marks Act,
s. 7(b) — Case law reviewed — Proof of elements of passing
off matter for trial judge — Concept of secondary meaning
analysed — First defendant not taking calculated risk in pub
lishing service abandoned by plaintiff.
Copyright — Injunctions — Ownership of copyright in tax
service extending to titles — Registration of copyright no basis
to restrain use of title as trade mark — Defendant's copyright
no bar to passing off action,by plaintiff.
This was an application for an interlocutory injunction
restraining the defendants from using or advertising titles asso
ciated with tax publications. The plaintiff, CCH Canadian Lim
ited (CCH), is a law publisher which, from February 1988 to
December 1990, published a monthly loose-leaf service called
ACCESS TO CANADIAN INCOME TAX and a companion
newsletter entitled THE ACCESS LETTER, both providing
information on Revenue Canada's latest interpretations and
applications of tax legislation. These works were published
pursuant to a contract entered into in February 1988 by CCH
and the defendant, Les Publications Dacfo Inc. (Dacfo) and the
latter's president, whereby CCH was granted the exclusive
right to publish the ACCESS service and Dacfo would retain
ownership of the copyright in all material published. The con
tract failed to deal with ownership of any trade marks which
could exist in the service's titles. In the fall of 1989, when both
publications were first distributed, Dacfo decided to prepare a
GST service in French; CCH declined its offer to publish this
service since it had plans of its own. Alleging a conflict of
interest and in view of Dacfo's refusal to abandon its project,
CCH decided to terminate its agreement with Dacfo for the
publication of the ACCESS services and notified its subscrib
ers accordingly. In January 1991, Dacfo approached But-
terworths to find out whether it would be interested in publish
ing the ACCESS services. In February 1991 when
Butterworths announced its intention to take over the service,
CCH commenced this action and decided to launch new publi
cations "WINDOW ON CANADIAN TAX" and "THE TAX
WINDOW" as "successors" to the ACCESS publications.
The issues were: whether the plaintiff had established that
there was a serious issue to be tried; whether it will suffer
irreparable harm if the injunction is not granted and whether
the balance of convenience is in its favour.
Held: the application should be dismissed.
In order to establish a serious issue to be tried, the plaintiff
must prove that the disputed titles have acquired a secondary
meaning which would indicate in the mind of the public a con
nection between the ACCESS services and itself as a pub
lisher. In other words, CCH must be able to demonstrate that
the ACCESS titles are already recognized by the relevant sec
tor of the public as denoting its publication. CCH argued that
the registrations of the ACCESS trade marks by Dacfo are
invalid but even if this was true, the case law has generally
stated that the validity of trade marks should not be addressed
in interlocutory proceedings and that they should be presumed
to be valid. Therefore, for the purposes of this application,
Dacfo's trade marks should be considered valid.
Plaintiff's passing off action is founded on paragraph 7(b) of
the Trade-marks Act and to succeed, CCH must prove that the
titles have become identified in the market with its books. The
plaintiff will have difficulty at trial in succeeding in a passing
off action as it had clearly abandoned any thoughts of continu
ing to publish the ACCESS titles and in view of the implied
understanding between the parties that the defendants would
own the trade marks in the titles. However, since it is possible
that a title can have a secondary meaning associated with a
publisher and that there is a residual goodwill in the trade
marks sufficient to support an action for passing off, the plain
tiff has satisfied the burden upon it of demonstrating a serious
issue to be tried. As to the issue of copyright, the defendants
were correct in submitting that the copyright protection
extends to the title. However, the defendant's copyright is not a
bar to an action for passing off.
With regard to the issues of irreparable harm and balance of
convenience, the factors which should be taken into account
have been summarized by Stone J. in Turbo Resources Ltd. v.
Petro Canada Inc.; on the basis of this analysis, the plaintiff
has not established harm for which damages would not be an
appropriate remedy. Evidence as to irreparable harm must be
clear, not speculative. The balance of convenience lies in
favour of the defendants since they have invested considerable
sums in the production and promotion of the ACCESS services
while CCH decided to cease publication of those services. The
status quo should be maintained pending trial because to grant
the injunction would in effect dispose of the action. The CCH
submission that Butterworths took a calculated risk in publish
ing the ACCESS services incorrectly characterized the defend
ant's actions. Nor could the Court accept the argument that this
transaction was removed from an ordinary commercial one to a
fiduciary relationship by the fact that the president of the
defendant, Dacfo, had formerly provided CCH with legal
advice as a member of the Martineau Walker law firm. It had
not been shown that he had acquired any special knowledge or
advantages from the solicitor-client relationship.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Copyright Act, R.S.C., 1985, c. C-42, s. 2.
Trademarks Act, R.S.C., 1985, c. T-13, s. 7(b).
CASES JUDICIALLY CONSIDERED
APPLIED:
Turbo Resources Ltd. v. Petro Canada Inc., [1989] 2 F.C.
451; (1989), 22 C.I.P.R. 172; 24 C.P.R. (3d) 1; 91 N.R.
341 (C.A.); Mathieson v. Sir Isaac Pitman & Sons Ltd.
(1930), 47 R.P.C. 541 (Ch. D.); Syntex Inc. v. Apotex Inc.
(1989), 27 C.I.P.R. 123; 28 C.P.R. (3d) 40; 32 F.T.R. 39
(F.C.T.D.); Maple Leaf Mills Ltd. v. Quaker Oat Co. of
Can. (1984), 2 C.I.P.R. 33; 82 C.P.R. (2d) 118 (F.C.T.D.);
Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd.,
[1987] 3 F.C. 544; (1987), 38 D.L.R. (4th) 544; 17
C.1.P.R. 263; 14 C.P.R. (3d) 314; 12 F.T.R. 317; 80 N.R.
9 (C.A.); Consumers Distributing Company Ltd. v. Seiko
Time Canada Ltd. et al., [1984] 1 S.C.R. 583; (1984), 10
D.L.R. (4th) 161; 29 C.C.L.T. 296; 3 C.1.P.R. 223; 1
C.P.R. (3d) 1;.54 N.R. 161; Norman Kark Publications
Ltd. v. Odhams Press Ltd., [1962] R.P.C. 163 (Ch. D.);
British Columbia v. Mihaljevic (1989), 26 C.P.R. (3d) 184
(B.C.S.C.); Korz v. St. Pierre et al. (1987), 61 O.R. (2d)
609; 43 D.L.R. (4th) 528; 23 O.A.C. 226 (C.A.); Lac Min
erals Ltd. v. International Corona Resources Ltd., [1989]
2 S.C.R. 574; (1989), 69 O.R. (2d) 287; 61 D.L.R. (4th)
14; 26 C.P.R. (3d) 97.
REFERRED TO:
Pizza Pizza Ltd. v. Little Caesar International Inc., [1990]
1 F.C. 659; (1989), 27 C.I.P.R. 126; 27 C.P.R. (3d) 525;
32 F.T.R. 43 (T.D.); Waxoyl AG v. Waxoyl Canada Ltd.
(1982), 38 O.R. (2d) 672; 66 C.P.R. (2d) 170 (H.Ct.);
Joseph E. Seagram & Sons Ltd. v. Andres Wines Ltd.
(1987), 16 C.I.P.R. 131; 16 C.P.R. (3d) 481; (1987), 11
F.T.R. 139 (F.C.T.D.); Syntex Inc. v. Novopharm Ltd.
(1991), 36 C.P.R. (3d) 129 (F.C.A.).
AUTHORS CITED
Salmond on the Law of Torts, 17th ed. by R. S. V. Heus-
ton, London: Sweet & Maxwell, 1977.
COUNSEL:
John R. Morrissey and Alistair G. Simpson for
plaintiff.
Daniel V. MacDonald for defendant But-
terworths.
Arthur A. Garvis and Richard Uditsky for defen
dant Les Publications Dacfo Inc.
SOLICITORS:
Smart & Biggar, Toronto, for plaintiff.
McMillan Binch, Toronto, for defendant But-
terworths.
Mendelsohn, Rosentzveig, Schacter for defen
dant Les Publications Dacfo Inc.
The following are the reasons for order rendered in
English by
CULLEN J.: This is an application by the plaintiff for
an interlocutory injunction restraining the defendants
from using or advertising the titles ACCESS TO
CANADIAN INCOME TAX and' 'THE ACCESS
LE ITER in association with their tax-related publi
cations.
My first words are those of apology to counsel for
both sides in that this decision on the motion has
taken two months, well in excess of the time I usually
require. I can only plead an exceptional assignment
schedule in the latter part of May and all of June and
the fact that this case in my view was most complex
requiring a good deal of reading.
FACTS
The plaintiff CCH Canadian Limited ("CCH") and
the defendant Butterworths of Canada Limited ("But-
terworths") both carry on business in Canada as pub
lishers of various legal and business texts. From Feb-
ruary 1988 to December 1990, CCH published a
monthly loose-leaf service providing information to
tax professionals on Revenue Canada's latest inter
pretations and applications of tax legislation. These
materials were published under the title ACCESS TO
CANADIAN INCOME TAX. CCH also published a
companion monthly newsletter entitled THE
ACCESS LETTER.
Both ACCESS publications are based upon a
database started in 1985 by Claude Désy, a lawyer
and president of the defendant Les Publications
Dacfo Inc. ("Dacfo"), that stored information
obtained from Revenue Canada through access to
information legislation. Désy filed approximately
two hundred requests for information with Revenue
Canada, and determined that the information he
gleaned in this manner would be of interest to other
tax practitioners. In 1987, Dacfo, through Désy and
its parent company Gestion Dacfo Inc. ("Gestion")
started negotiations with CCH, through its president
Ken Lata, to publish the information along with com
mentaries as a service for tax practitioners. A contract
was signed on February 16, 1988 between CCH,
Dacfo and Désy whereby CCH was granted the right
to publish the service by Dacfo and Désy. The con
tract provided, inter alia, that CCH would provide
Dacfo with the facilities to produce the materials for
the ACCESS publications, and set out the terms of
payment to Dacfo for the service. The contract also
provided that Dacfo would retain the copyright to the
material in the service. The relevant terms of the con
tract are as follows (in the following extract from the
contract, Dacfo is referred to as the "Owner", Désy
the "Specialist", and CCH the "Publisher"):
Clause 2.1 The Title of the Service shall be "Access to Reve
nue Canada Income Tax" or other such title as the parties may
agree.
Clause 2.13 The Specialist's name shall be printed on the spine
of each binder of the Service and shall appear in all advertising
material for the Service. The name of the Specialist will be
mentioned, as Editor-in-Chief of the Service in all advertising
and on the monthly update sheets.
Clause 5.1 Ownership of the copyright in all material in the
Owner's database (hereinafter called "database") in all
software developed by or for the Owner, and in all material
provided by the Owner for inclusion in the services shall be
retained by the Owner.
Clause 5.2 The Owner hereby grants to the Publisher the exclu
sive right and license to publish and use the material supplied
to the Publisher for inclusion in the Service. The right and
license hereby granted to the Publisher shall not be revoked
during the subsistence of this agreement and no other right or
license for publication or use of any of the said material shall
be granted by the Owner (or Specialist) to any other person or
company during the subsistence of this agreement.
Clause 5.4 Notwithstanding the Owner's copyright in the
materials in the database, neither the Owner nor the Specialist
shall be at liberty, during the subsistence of this agreement, to
sell or market any of the said materials or offer them for sale;
and, without limiting the generality of the foregoing, neither
the Owner nor the Specialist shall be at liberty to sell or offer
for sale any of the said materials or any information from them
by on-line transmission, laser disc or any other non-print
medium.
Clause 6.1 This agreement may be terminated by either the
Publisher or the Owner, upon 90 days written notice to the
other party, in the event that the unit count for subscriptions to
the Service fails to reach 1,200 units by the end of the third
royalty year.
Clause 6.2 The Publisher may terminate this agreement at any
time following the end of the third royalty year, upon 90 days
written notice to the Owner, if in the opinion of the Publisher
the market response to the Service has been or has become
unsatisfactory and not up to the expectations upon which the
parties' assumptions as to the viability of the project were
based.
Clause 8 Each party undertakes not to produce or sell, or to be
associated with anyone else or with any other company in the
production or sale of any material competing with this Service,
during the subsistence of this agreement.
The contract is silent as to the ownership of any
trade marks that may exist in the titles to the service.
The plaintiff states that its understanding was that it
owned whatever trade marks there were in the titles.
CCH also states that allowing Dacfo to retain the
copyright to the service was an exception to CCH's
usual practice of holding copyright to its loose-leaf
services. It provides affidavit evidence of industry
practice to this effect from Michael Sloly, a senior
officer of CCH.
The defendants' position as to the ownership of the
trade marks differs of course from that of the plain
tiff. During the negotiations, Dacfo's parent company
Gestion applied to register several trade marks con
taining the word ACCESS, including ACCESS TO
CANADIAN INCOME TAX on January 21, 1988,
prior to the execution of the agreement. It matured to
registration on March 29, 1991. On September 18,
1989, Dacfo applied to register the trade mark THE
ACCESS LETTER, which matured on January 25,
1991. Dacfo and Désy maintain that Désy advised
Lata that he was reserving several titles on behalf of
Gestion. It is unclear precisely when Lata was first
expressly advised of the defendants' trade mark
activities. However, Désy stated on cross-examina
tion of his affidavit that it was implicit that Lata was
aware during the negotiations leading up to the sign
ing of the agreement that these titles were being
reserved for Gestion, since if negotiations with CCH
failed, Désy would begin negotiations with other
potential publishers. Désy also states in his affidavit
that, in the summer of 1989 after the contract had
been signed, he advised Lata that Dacfo's choice for
the title of the service was ACCESS TO CANA-
DIAN INCOME TAX, to which Lata agreed. (Sloly
states in his affidavit that Lata denies Désy's version
of events, but there is no affidavit from Lata himself
to this effect). On the other hand, CCH states that it
had no knowledge of Dacfo's and Désy's assertions
of trade mark ownership until December 1990, when
the contract was terminated.
As a further indication of the parties' understand
ing as to ownership, reference was made to other
communications between the parties. On June 20,
1989, Dacfo forwarded to CCH a schedule which
allocated their respective responsibilities relating to
the completion of the services. One of the responsi
bilities of Dacfo set out in the schedule was "Trade-
mark Reservation for Title". The defendants submit
that it is self-evident from this that the parties under
stood that the defendants were to own the trade mark.
CCH maintains, however, that this phrase is equivo
cal, and not conclusive of the parties' understanding
of who would own the trade mark. CCH states, for
example, that the phrase could just as easily be con
strued as meaning that Dacfo was to reserve the trade
mark for CCH.
THE ACCESS LETTER monthly newsletter was
first distributed in Canada in about September 1989.
The ACCESS TO CANADIAN INCOME TAX ser
vice was first distributed in November 1989. CCH
extensively promoted both publications between Sep-
tember 1989 and December 1990, at a cost of over
$2,300,000. CCH also paid Dacfo $1,200,000 for its
efforts in producing the service. CCH's input into the
actual content of the service was quite limited, con
cerning matters such as format and other editorial
functions such as tables and indexes. All the parties
agree that the service and the newsletter were suc
cessful products.
In the fall of 1989, Dacfo decided to prepare a ser
vice concerning the Goods and Services Tax (GST)
in the French language. It offered this service to CCH
to publish, but the offer was refused as CCH already
had plans to put out a French version of its existing
GST service. Dacfo therefore decided to market the
service itself, under the title TPS CANADA -QUÉ-
BEC. However, CCH took the position that this ser
vice would be in competition with the planned CCH
service, and constituted a conflict of interest for
Dacfo. (It does not appear at the time that CCH con
sidered there to, be a violation of the non-competition
clause in the contract with Dacfo and Désy, and it
does not appear to be relying on these grounds at the
time. In my opinion, however, the services do not
compete, one being a work on consumption tax, and
one being directed towards income taxation). It
appears that Désy used equipment provided, by CCH
for the ACCESS publications to work on the compet-
ing GST service. Despite requests from CCH to cease
work on the project, Désy refused to do so. Relations
between the two took an acrimonious turn, as diffi
culties between the parties concerning other joint
publications were also discussed. On December 3,
1990, CCH advised Désy and Dacfo that it was ter
minating its agreement with them to publish the ser
vice. CCH published its last issue of ACCESS TO
CANADIAN INCOME TAX and THE ACCESS
LE I"I'ER on November 22, 1990. In January 1991,
CCH sent the following notice to subscribers of the
service:
CCH Canadian Limited regrets to announce that due to circum
stances beyond its control, it has ceased publication of Access
to Canadian Income Tax, including The Access Letter, effec
tive with report no. 12 dated November 22, 1990.
Subscribers will be credited under separate cover, for the
unexpired portion of their paid subscriptions.
We thank you, our loyal subscribers, for your support of this
reporting service and trust that the information contained in it
will continue to assist you in your research for some time to
come.
Following the termination of the contract, the
defendants approached other publishing companies to
locate a publisher for the service. Dacfo, through
Désy, contacted Butterworths in January 1991 to
determine if Butterworths would he interested in
publishing the ACCESS services. Butterworths was
interested, but out of caution contacted CCH to
advise it of its interest in the service and inquire if
CCH's subscription list was for sale. Butterworths
decided to publish the ACCESS services on January
22, 1991, and advised CCH of its intentions. In Feb-
ruary 1991, Butterworths advertised to the public that
it would be publishing the ACCESS services. CCH
then threatened legal action. Butterworths indicated
that it would strongly defend such proceedings. CCH
commenced this action on February 21, 1991. In the
meantime, Butterworths has continued with its mar
keting efforts of both services, and published THE
ACCESS LETTER on March 4, 1991. ACCESS TO
CANADIAN INCOME TAX will he published and
distributed in May, 1991.
After learning that Butterworths intended to pub
lish the ACCESS services, CCH decided to publish
what it characterizes as the "successors" to the
ACCESS publications, "WINDOW ON CANADIAN
TAX" and "THE TAX WINDOW", with the editorial
assistance of another law firm of tax specialists.
POSITION OF THE PLAINTIFF
In support of its injunction application, CCH sub
mits that it owns the trade marks ACCESS TO
CANADIAN INCOME TAX and THE ACCESS
LEI IbR because it has used the trade marks in such
a way as to make them distinctive of CCH in the
mind of the public. It concedes that as the defendants
own the copyright to the materials, they have the
right to publish the service with another publisher.
What CCH seeks in this action is to prevent the
defendants from publishing the service under the dis
puted titles.
CCH submits that even if it no longer uses the
trade marks, it retains a residual goodwill in the
marks that can support an action for passing-off.
Allowing the defendants to publish under the
ACCESS titles will depreciate the goodwill of CCH,
and constitute irreparable harm. CCH also states that
there is no evidence of any use prior to February
1991 of the trade marks in question by anyone except
CCH. It submits that as the trade mark registrations
by the defendants lack distinctiveness, the registra
tions are invalid.
CCH also states that the defendants have by their
activities infringed paragraph 7(b) of the Trade
marks Act [R.S.C., 1985, c. T-13], which states that
one cannot direct public attention to his wares, ser
vices or business in such a way as to cause or be
likely to cause confusion in Canada, with the wares,
services or business of another. CCH states that in
publishing under the titles in question, the defendants
are passing off their goods as those of CCH.
POSITION OF THE DEFENDANTS
The defendants submit that Dacfo has copyright in
the titles as part of its copyright in the service, and
that Dacfo holds the registered trade mark in the
titles. Therefore, they state that there is no serious
issue to be tried, as ownership of the trade marks
clearly rests with Dacfo. The validity of a registered
trade mark will generally be presumed on an applica
tion for an interlocutory injunction.
The defendants also submit that there is no evi
dence that CCH will suffer irreparable harm if the
injunction is refused. With respect to the balance of
convenience, it is submitted that this also favours the
defendants. Inter alia, the defendants submit on these
points that if they are enjoined from using the
ACCESS titles, the action will effectively have been
decided at the interlocutory stage. If enjoined, they
will have to re-title their publications, and if at trial
the injunction is removed there would be little point
in returning to the former titles. On the other hand, if
the injunction is refused, CCH can continue publish
ing its Window service and the defendants can keep
publishing its Access service. Any harm that CCH
suffers as a result of this continuation of the status
quo can be compensated in damages.
ANALYSIS
The prerequisites for an interlocutory injunction
are well known. The applicant must establish (1), a
serious issue to be tried, (2) that it will suffer irrepa
rable harm if the injunction is not granted, and (3)
that the balance of convenience is in its favour: Turbo
Resources Ltd. v. Petro Canada Inc., [1989] 2 F.C.
451 (C.A.). I will first examine the legal issues to see
if there is a serious issue to be tried, and then address
the issues of irreparable harm and balance of conve
nience.
Serious issue to be tried
In my view, the strength of the plaintiff's argument
on the serious issue branch of the test turns on the
existence of a property right, if any, that CCH can
assert in the titles. If CCH can demonstrate that the
titles have acquired a secondary meaning, i.e., that
the titles are indicative in the minds of the public of a
connection between the ACCESS works and itself as
the publisher, then in my opinion there may be a seri
ous issue to be tried. In Mathieson v. Sir Isaac Pit-
man & Sons Ltd. (1930), 47 R.P.C. 541 (Ch. D.), the
plaintiff, which had published a book titled "How To
Appeal Against Your Rates in the Metropolis" from
1887 until 1929, tried to restrain the defendant from
selling two books entitled "How to Appeal Against
Your Rates Within the Metropolis" and "How to
Appeal Against Your Rates Without the Metropolis",
which were first published in 1930. Maugham J. dis
cussed the principles to be applied in such circum
stances at page 550:
It is often said that in cases of this kind you have to consider
whether the descriptive words under which the goods are sold
have acquired a secondary or a special meaning. In connection
with the title of a book, that means this: does the title used
indicate to the minds of the public the specific work in ques
tion in connection with the author of it, or it may be in some
rare cases in connection with the publisher of it? For instance,
taking such a work as we have to deal with here: if we are
going to use the words "secondary meaning" in connection
with a book published for all these years by the Plaintiff on
"How to appeal against your rates," that secondary meaning is
not proved by saying that anybody who asked for "How to
appeal against your rates" before January of the present year
must mean, if he knows anything about the work, the book
written by Mr. Lawrie. That does not show a secondary mean
ing. The secondary meaning in this connection must connote
that in the market where such books are purchased and among
the members of the public who are buyers of these books, the
mere title "How to appeal against your rates" indicated the
work of Mr. Andrew Douglas Lawrie, and perhaps further indi
cated that it was published by Effingham Wilson; and unless
that can be established as a fact, it seems to me that the case of
the Plaintiff must fail. [Underlining added.]
Therefore, CCH may be able to succeed at trial in
restraining the publication of Dacfo's book by But-
terworths under the ACCESS titles, if it can demon
strate that the book is already recognized by the rele
vant sector of the public as denoting CCH's
publication. In my view, this question meets the
threshold injunction test of a serious issue to be tried.
Before addressing the issues of irreparable harm
and balance of convenience, however, a number of
preliminary points should be addressed which were
extensively argued by the parties. The first concerns
the effect on these proceedings of the fact that Dacfo
owns the registered trade marks in the titles. The sec-
and concerns the effect on this matter of the fact that
Dacfo owns the copyright to the service.
Validity of trade marks
The plaintiff asserts that it owns the trade mark in
the titles. The defendants, in opposing this injunction
application, rely in part on the fact that they are the
registered owners of the trade marks in question.
CCH submits, however, that the registrations of the
ACCESS trade marks by Dacfo are invalid because:
(a) they lack distinctiveness, (b) there was no use by
Dacfo when declarations of use were filed, and (c)
there was no bona fide intention on the part of Dacfo
to use the trade marks when the applications were
filed. The defendants argue that, in an interlocutory
injunction application, it is not appropriate to enter
into a discussion of the validity of a registered mark.
I agree with the defendants that the validity of the
trade marks should not be addressed in these interloc
utory proceedings, and that they should be presumed
to be valid. Such an approach is consistent with the
bulk of the case law on the issue. As Dubé J. stated
with respect to an argument that a plaintiff's mark
was invalid in Syntex Inc. v. Apotex Inc. (1989), 27
C.I.P.R. 123 (F.C.T.D.), at page 125:
... the arguments ... were very substantial and will undoubt
edly receive full consideration at the proper time, at the trial of
this matter. These arguments were premature, however, as they
dealt mostly with the validity of the trade mark which, at this
stage of the proceedings, must be presumed to be valid.
See to the same effect: Pizza Pizza Ltd. v. Little Cae-
sar International Inc., [1990] 1 F.C. 659 (T.D.); Wax-
oyl AG v. Waxoyl Canada Ltd. (1982), 38 O.R. (2d)
672 (H.Ct.), at pages 681-682; Joseph E. Seagram &
Sons Ltd. v. Andres Wines Ltd. (1987), 16 C.I.P.R.
131 (F.C.T.D.), at pages 135-136.
It is true that some cases have indicated that there
is not a hard and fast rule against considering the
validity of a trade mark in interlocutory proceedings
in certain circumstances. As Cattanach J. stated in
Maple Leaf Mills Ltd. v. Quaker Oat Co. of Can.
(1984), 2 C.I.P.R. 33 (F.C.T.D.), at page 43:
Under normal circumstances it is not the function of the
Judge hearing an application to determine the validity of the
registration of a trade mark. The presumption is that the trade
mark is a valid mark validly registered unless a strong case of
invalidity is made out and in this context I equate the liability
to expungement to "validity". [Emphasis added.]
In this case, however, I cannot say that a "strong case
of invalidity" has been made out by the plaintiff. In
addition, even assuming that it may be proper in
some circumstances to consider validity on an inter
locutory injunction application, in my opinion it
would not be appropriate to do so in the case at hand.
Determining the validity of the trade mark in this
case on the grounds asserted by the plaintiff would
require that considerable evidence be led on disputed
questions of fact. In such a situation, it is not appro
priate to decide such contentious matters at the inter
locutory stage: see Syntex Inc. v. Novopharm Ltd.
(1991), 36 C.P.R. (3d) 129 (F.C.A.). I am therefore of
the view that for the purposes of this application, the
defendants' trade marks should be considered valid.
Passing Off
While I have concluded that the defendants' trade
marks should be deemed to be validly registered for
the purposes of this motion, this does not mean that
there is not a serious issue to be tried. As noted
above, it is possible that an action in passing off
might succeed at trial despite the defendants' regis
tration of the trade marks, if CCH can prove that the
titles have become identified in the market with its
books. As Gray J. held in Waxoyl, supra, at page 681,
"The mere fact that a trade mark has been registered
is no defence to a passing off action." The foundation
of the plaintiff's passing off action in this Court is
found in paragraph 7(b) of the Trade-marks Act,
which is a codification of the common law tort of
passing off. 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.
As MacGuigan J.A. observed in Asbjorn Horgard
A/S v. Gibbs/Nortac Industries Ltd., [1987] 3 F.C.
544 (C.A.), this subsection has three elements: a per
son shall not 1) direct public attention to his wares,
services or business (2) in such a way as to cause or
be likely to cause confusion in Canada (3) at the time
he commenced so to direct attention to them, between
his wares, services or business. Whether or not these
elements have been established is in my view a mat
ter for the judge trying this action.
Passing off in general was discussed in the follow
ing terms in the text Salmond on Torts (17th. ed.,
1977) at pages 400-401, quoted by Estey J. in Con
sumers Distributing Company Ltd. v. Seiko Time
Canada Ltd. et al., [1984] 1 S.C.R. 583, at page 597:
To sell merchandise or carry on business under such a name,
mark, description, or otherwise in such a manner as to mislead
the public in not believing that the merchandise or business is
that of another person is a wrong actionable at the suit of that
other person. This form of injury is commonly, though awk
wardly, termed that of passing off one's goods or business as
the goods or business of another and is the most important
example of the wrong of injurious falsehood, though it is so far
governed by special rules of its own that is advisable to treat it
separately. The gist of the conception of passing off is that the
goods are in effect telling a falsehood about themselves, are
saying something about themselves which is calculated to mis
lead. The law on this matter is designed to protect traders
against that unfair form of unfair competition which consists in
acquiring for oneself, by means of false or misleading devices,
the benefit of the reputation already achieved by rival traders.
In Mathieson, supra, Maugham J. discussed the
principles to be applied in a case of passing off in the
context of books as follows, at page 549:
I do not think I can better state what has been determined than
by making a sort of adaptation of what Lord Herschell said in
Reddaway v. Banham at page 240, adapting his language to the
case of a book. This, in substance, is what I gather from his
statement: the name of a person or words forming part of the
common stock of language, such as the description of the con
tents of a book, may become so far associated with the book of
a particular author that it is capable of proof that the use of it
by itself, without explanation or perhaps qualification, by
another publisher, would deceive a purchaser into the belief
that he was getting a book written by A, when he was in fact
getting an entirely different book written by B. In a case of this
description the mere proof by the plaintiff that the defendants
are using the title of a book which the plaintiff had adopted as
the title of his book, would not entitle him to any relief; he
could only obtain it by proving further that the defendants had
adopted the title of his book and were using it under such cir
cumstances or in such a manner as to lead purchasers of his
book to buy it as the book of the plaintiff. If he could succeed
in proving this, he would on well-established principles be
entitled to an injunction. Accordingly, I have as a Jury to
answer the question whether it has been established by the evi
dence in this case that the Defendants have been, stating it
shortly, passing off their books as the books of the Plaintiff;
and I have to remember that the mere fact that there is similar
ity is not sufficient to entitle the Plaintiff to relief.
In my view, as Maugham J. noted above, it is pos
sible that in rare cases a title will have a secondary
meaning associated with a publisher, as well as an
author that would support an action for passing off by
the publisher. In my opinion, the title of a book
would generally denote the book itself, and perhaps
the author, and would not usually refer to the pub
lisher in the minds of the public. However, it is possi
ble that a secondary association of the ACCESS titles
with CCH could be established by evidence at trial. It
appears to me, however, that the plaintiff will have
difficulty at trial in succeeding in a passing off
action, for the following reasons.
First, in my opinion it is clear that CCH had
clearly abandoned any thoughts of continuing to pub
lish under these titles. As CCH submitted, it is true
that there is authority to the effect that even if a trade
mark is no longer in use by a plaintiff, the plaintiff
may succeed in enjoining use by the defendant if it
can show that it has retained a residual goodwill in
the trade mark at the time of the use by the defendant.
As Wilberforce J. (as he then was) held in Norman
Kark Publications Ltd. v. Odhams Press Ltd., [1962]
R.P.C. 163 (Ch. D.), at page 169:
The principle to be applied, in my judgment, is that which
lies at the foundation of all cases where the plaintiff seeks to
protect a trade name (such name not being a registered trade
mark), namely that the plaintiff must show that at the date of
the user by the defendant of which he complains, he has a pro
prietary right in the goodwill of the name, or, in other words,
that the name remains distinctive of some product of his, so
that the use by the defendant of the name is calculated to
deceive.
However, given the clear language of the notice of
discontinuance sent to subscribers (especially in view
of the fact that the subscribers were members of a rel
atively small, sophisticated pool of consumers) and
the fact that the plaintiff has started a new tax service
under a different title, it appears to me that if there
were any residual goodwill of CCH in the titles at the
time of the termination of the agreement, there was a
complete lack of effort by the plaintiff to preserve it
so as to entitle the plaintiff to attempt to enjoin others
from using it. If CCH had any reputation in the mind
of the former subscribers, in my opinion it would be
that of the former publisher of the ACCESS services.
See Norman Kark, supra, at page 176. CCH submit
ted that it viewed the WINDOW publication as a
"successor" to the ACCESS service, and only used
the WINDOW title instead of ACCESS because the
law firm with which it prepared WINDOW did not
wish to become embroiled in a trade mark dispute.
Notwithstanding its understanding with the law firm,
the message to the public in my view was that CCH
was no longer publishing under the ACCESS titles.
This clear abandonment by CCH would, in my
view, make it difficult for CCH to argue that there
was any deception of the public as to the source of
the ACCESS services. The essence of any passing off
action is a misrepresentation that one's goods are
someone else's or otherwise associated with that per
son. As misrepresentation as to source appears
unlikely to succeed, any misrepresentation resulting
in passing off would likely have to be as to the con
tent or nature of the services. This too would be prob
lematic, as it appears that the ACCESS service pub
lished by Butterworths is substantially similar to that
published by CCH. However, any differences in the
services is in my view a matter to be resolved at trial.
Second, while the parties' understanding as to the
ownership of the trade marks in the titles is not con
clusive of the issue, to the extent that such under
standing is relevant, the weight of the evidence on
this injunction application leads me to believe that
the implied understanding between the parties was
that the defendants would own the trade marks in the
titles. A reading of the contract between Dacfo, Désy
and CCH buttresses this argument. It appears clear
that CCH was given the role of a mere licensee to
publish the service, without any control over the
copyright in the work.
Despite my doubts as to its ultimate success, it is
still possible that evidence could be led at trial that
would establish that there is residual goodwill in the
trade marks sufficient to support an action for passing
off. I would therefore conclude that the plaintiff has
satisfied the burden upon it of demonstrating a seri
ous issue to be tried.
Copyright
Considerable argument was devoted to the issue of
copyright, and whether Dacfo's ownership of the
copyright in the service extended to the ACCESS
titles. The plaintiff takes the position that there can be
no copyright in a mere title. The defendants submit
that pursuant to section 2 of the Copyright Act,
R.S.C., 1985, c. C-42, a work "includes the title
thereof when such title is original and distinctive",
and that accordingly copyright in a literary work
includes copyright in its title as one aspect of that
work.
In my opinion, the defendants are correct in stating
that the copyright protection extends to the title.
However, it was clearly held in British Columbia v.
Mihaljevic (1989), 26 C.P.R. (3d) 184 (B.C.S.C.) at
page 190 that a registration of copyright in a work
cannot be used as a basis to restrain another from
using the title as a trade mark. Therefore, the defend
ants' copyright is not a bar to a passing off action by
the plaintiff.
Having determined from the foregoing that there is
a serious issue to be tried, I will now address the
issues of irreparable harm and balance of conve
nience.
Irreparable Harm/Balance of Convenience
In Turbo Resources, Stone J.A. summarized the
factors that could be weighed in the balance once the
serious issue test is met, at pages 473-474:
(a) where a plaintiff's recoverable damages resulting in the
continuance of the defendant's activities pending trial would
be an adequate remedy that the defendant would be financially
able to pay, an interlocutory injunction should not normally be
granted;
(b) where such damages would not provide the plaintiff an ade
quate remedy but damages (recoverable under the plaintiff's
undertaking) would provide the defendant with such a remedy
for the restriction on his activities, there would be no ground
for refusing an interlocutory injunction;
(c) where doubt exists as to the adequacy of these remedies in
damages available to either party, regard should be had to
where the balance of convenience lies;
(d) where other factors appear to be evenly balanced, it is pru
dent to take such measures as will preserve the status quo;
(e) where the evidence on the application is such as to show
one party's case to be disproportionately stronger than the
other's, this factor may be permitted to tip the balance of con
venience in that party's favour provided the uncompensatable
disadvantage to either party would not differ widely;
(f) other unspecified special factors may possibly be consid
ered in the particular circumstances of individual cases.
Applying the first of Stone J.A.'s guidelines, in my
opinion, the plaintiff has not established irreparable
harm for which damages would not be an appropriate
remedy. There was insufficient evidence led by the
plaintiff to establish that there was a loss of goodwill
or reputation by virtue of the alleged use of its unre
gistered trade mark. As Heald J.A. recently held in
the recent case of Syntex Inc. v. Novopharm Ltd.,
supra, evidence as to irreparable harm must be clear,
and not speculative. In addition, Butterworths has
undertaken to keep records in connection with the
sale of all subscriptions to the service, which would
provide a ready base for calculation of any damages
that may be ordered at trial.
As for the balance of convenience, I am also con
vinced that it lies in the defendants' favour. The
defendants have invested considerable sums in the
production and promotion of the ACCESS services,
while CCH made the decision to cease publication of
the services, and then re-enter the market with a dif-
ferently-titled service. In my view, this status quo
should be maintained pending trial.
CCH attempted to portray the actions of But-
terworths in publishing the ACCESS service as being
in that line of cases where the defendants' acts were
in the nature of a calculated risk, saying that they in
effect entered the field "with their eyes wide open" to
the chance that there was a trade mark in the name
taken. See Joseph E. Seagram v. Andres Wines Ltd.,
supra. I cannot accept this characterization of But-
terworths' actions. It only entered the field after the
termination of the agreement by CCH, and determin
ing that Dacfo held both the registered trade marks
and the copyright. Its conduct was exemplary
throughout, advising CCH of its intentions to publish
the new service, and at all times CCH knew of But-
terworths' plans for the service.
I Am also of the opinion that to grant the injunction
would in effect dispose of the action. As the defend
ants state, if they are enjoined at this stage, they will
have to re-title the service pending trial. If the injunc
tion is removed at trial, it would be impractical for
the service to revert to the ACCESS titles after pub
lishing for some time under a new title.
Finally, CCH submitted that the relationship
between the parties should be a matter to be consid
ered under the balance of convenience. He submits
that as Désy and his firm Martineau Walker have in
the past been retained to provide CCH with legal
advice, there is therefore a fiduciary relationship
between the parties. This relationship creates an
equity which runs against Dacfo being able to retain
the trade marks, in that Dacfo should have been
placed under a duty to disclose fully all its trade mark
activities, and not to have relied on an implicit under
standing with Lata.
It is true that a lawyer may owe a fiduciary duty to
a former client if he has gained an advantage or spe
cial knowledge from that relationship. In Korz v. St.
Pierre et al. (1987), 61 O.R. (2d) 609 (C.A.), a solici
tor had failed to disclose to his former clients with
whom he had gone into business that he was judg
ment proof. The Court, in ruling that he was required
to make disclosure of this fact, made the following
observations [at page 618]:
As a result of the possession by the lawyer of special and con
fidential information pertaining to clients, he should not take
advantage of that position of superiority if he enters into a
transaction with them. If he is entering into such a transaction,
the lawyer is bound to make a full disclosure of his position so
that the client is not placed at a disadvantage. The ethics of the
profession and fairness require that such a disclosure be made.
To hold otherwise would place lawyers in an unfairly advanta
geous position. They would be able to benefit from the special
and confidential information obtained from their clients in the
course of advising them on legal problems, while permitting
lawyers to surreptitiously avoid the very risks they know are
being assumed by their clients. This principle must apply in
many instances to former clients as well as current clients.
However, I am not satisfied that this is a case where
it could be said that Désy had acquired special
knowledge or advantages as a lawyer for CCH that
would lift this transaction out of the ordinary com
mercial setting, and into a fiduciary relationship. I
would add in passing that in my view the use of the
fiduciary concept in the commercial context should
be approached with care. While, as Stone J.A. notes
in Turbo, unspecified special factors may be consid
ered in the balance of convenience in certain circum
stances, I would also observe the admonition of
Sopinka J. in Lac Minerals Ltd. v. International
Corona Resources Ltd., [1989] 2 S.C.R. 574. Sopinka
J. stated, at page 596, concerning the imposition of
fiduciary obligations in business dealings, "equity's
blunt tool must be reserved for situations that are
truly in need of the special protection that equity
affords."
DISPOSITION
In my opinion, while it is possible that there may
be a serious issue to be tried, I am not convinced that
the plaintiff has established that irreparable harm will
result if the injunction is refused, or that the balance
of convenience is in its favour. Therefore, the appli
cation will be dismissed.
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.