Another one bites the trade-mark dust : Federal Court of Canada refuses to grant interlocutory injuction

2008-01-01

A
NOTHERONEBITESTHETRADE-MARKDUST:FEDERALCOURTOF
CANADAREFUSESTOGRANTINTERLOCUTORYINJUNCTION

STELLASYRIANOS*
LEGERROBICRICHARD,
LLP
L
AWYERS,PATENT&TRADEMARKAGENTS
Inarecentdecision,theFederalCourtofCanadadismissedthePlaintiffs’motion
seekinganinterlocutoryinjunctionclaimingtrade-markinfringementand/orpassing-
offofitsservicescontrarytoSections7and20oftheTrade-marksAct[CMAC
MORTGAGESLTD.,CMACMORTGAGES(ALBERTA)LTD.andONTARIO
MORTGAGEACTIONCENTRELTD.c.o.b.OMACvs.CANADIANMORTGAGE
EXPERTCENTRESLTD.c.o.b.CMEC,RobertDotzertandWilliamJacoletti,2008
FC6(T-1863-07)January4
th,2008].
TheFacts
ThePlaintiffs
ThePlaintiffOntarioMortgageActionCentreLtd.carryingonbusinessasOMAC,is
engagedintheresidentialmortgagebusinessinOntariosince1993,offeringservices
suchasmortgagerefinancing,pre-approvals,renewalsaswellasrelatedfinancial
servicesbetweenhomebuyersandsellers.ThePlaintiffOMACistheownerofa
severalOMACtrade-markregistrationswiththefirstonehavingbeengrantedon
October7,2003forOMACinassociationwithmortgageandloanbrokerageandloan
financingservices.InNovemberof2002,inanticipationoffuturegrowthintherestof
Canada,thePlaintiffappliedtoregisterthemarkCMAC(the“O”inOMACwas
replacedwitha“C”for“Canadian”).Atthetimeoftheseproceedings,OMAC
operatedin29locationsacrossOntario.
ThePlaintiffCMACMortgagesLtd.wasincorporatedunderthelawsofOntarioon
August1
st,2006withthegoalofofferingmortgagebrokerageservicestothepublic
acrossCanadabutitneveroperatedinOntario.

©CIPS,2008.*Lawyer,StellaSyrianosisamemberofLEGERROBICRICHARD,L.L.P.,amultidisciplinaryfirmof
lawyers,andpatentandtrademarkagents.PublishedintheFebriaryissueoftheWorldIntellectual
PropertyReport.Publication142.210.

2
ThefirstconcretestepinCMAC’sCanadianexpansionoccurredinCalgary,Alberta.
OnAugust24th,2007,thePlaintiffCMACMortgages(Alberta)Ltd.wasincorporated
asanAlbertaCorporationandwasthefirstCMACagencytoprovidemortgage
brokerageservicesinAlbertastartinginlateSeptember2007withtheopeningofits
firstCalgarylocation.
TheDefendants
ThecorporatedefendantCanadianMortgageExpertCentresLtd.carryingon
businessasCMECwasincorporatedasanOntariocorporationshortlyafterCMAC
MortgagesLtd.,approximately1½yearsafterDefendantMr.DotzerthadleftOMAC
(heownedhalfthesharesofOMAC).CMECoperatedinOntarioattwolocations,
withexpansionplanswithinOntario.TheCMECacronymwasadoptedwithadesign
elementincorporatingahouseandmapleleafdesign(“CMEClogo”).TheCMEClogo
wasalwaysaccompaniedbycorporateDefendant’sfullnameonsignage,business
cards,letterheadandinalladvertisingandstaffwasinstructedtoanswerthephone
usingthefullcompanyname.CMECbeganofferingitsservicesinmidJuly2007.
Actualconfusion
ThePlaintiffsfiledevidenceofinstancesofactualconfusion.Whileoneaffidavit
containeddoublehearsay,inanotherswornbyaproductionconsultantwithOMAC,
theaffiantstatedthatOMAC’sheadofficeinLondon,Ontarioreceivedtwofaxesfrom
amortgagelenderwhichwereintendedforCMEC.
Theinterlocutoryinjunction
IntheirmotionbeforetheCourt,thePlaintiffssoughttorestrainDefendantsfrom
usingthewordCMECoranywordconfusinglysimilartoCMACorOMAC,asatrade
name,corporatename,orbusinessstyle,inassociationwithmortgagebrokerage
servicesandfrompassing-offtheirservicesunderCMECasandforthatofthe
Plaintiffs’servicesunderCMAC.ThePlaintiffsdidnotseektorestraintheDefendants
fromdoingbusinessunderthecorporateDefendant’snameofCanadianMortgage
ExpertCentresLtd.
ItistritelawthattheFederalCourtofCanadaassessesthemeritofinterlocutory
injunctionapplicationsonthebasisofacumulativethree-parttestestablishedbythe
SupremeCourtofCanada:

(1)theapplicantmustshowthatithasaseriousissuetobetried;
(2)theapplicantmustsatisfytheCourtthatitwillsufferirreparableharmifthe
injunctiondoesnotissue;
(3)thebalanceofconveniencemustfavourgrantingtheinjunction.

3
TheCourtheldthatontheissueoftheexistenceofaseriousissuetobetriedas
concernedconfusionandpassing-offbetweenOMACandCMEC,thePlaintiffshad
establishedthiselement(bothoperatedinOntario).However,thispartofthetestwas
notprovenbetweentheothertwoplaintiffsCMACMortgagesLtd.andCMAC
Mortgages(Alberta)Ltd.andCMECbecausethepartieswerenotbothpresentinthe
samemarketplace(CMACoperatedinAlbertawhileCMECoperatedinOntario).The
Courtreiteratedthatthethresholdforthisfirstelementisalowoneandthatthe
PlaintiffOMAC’sallegationswereneitherfrivolousnorvexatious.
Ontheissueofirreparableharm,theCourtruledthatthePlaintiffshadnotled
sufficientevidencetoproveirreparableharmiftheinjunctionwasnotgranted.The
CourtopinedthatthePlaintiffs’evidencetouchedonthepastandnotonthepresent
orthefutureandinmanyinstanceswasmerelyspeculative.TheCourtalsonoted
thatratherthanleadingevidencetoestablishirreparableharm,thePlaintiffs
attemptedinsteadtoshowDefendantswereimpecuniousandthereforewouldnotbe
abletoshoulderadamageawardagainstthem.TheCourtheldthatnoevidenceon
recordallowedittosupportachargeofimpecuniosity.
Ontheissueofthebalanceofconvenience,theCourtconcludedthatitweighedin
favouroftheDefendantsasconcernedOMACandCMECnotCMACandCMECwho
werenotoperatinginthesamemarkets.
IntheCourt’spreliminaryassessmentofOMAC’scase,itwasoftheviewthatitwas
weakintermsofbothactualandlikelyconfusioninsofarasbuyingmortgage
servicesdiffersfrombuyingproductsoffashelf:thebuyerofmortgageserviceswill
bemorediscriminatingbecauseheorsheisborrowinglargesums.Moreover,the
Courtstatedthatthedeliveryofmortgageservicesisahands-onpersonalservice
whichreducestheriskofconfusion.AsforconfusionbetweenthemarksOMACand
CMEC,theCourtindicatesthatjurisprudenceshowssuchmarksareweak.
Conclusion
FortheseasonedIPpractitioner,theCourtsrefusaltograntaninterlocutory
injunctionisapotentreminderofthedifficultiesencounteredincasesoftrade-mark
infringementand/orpassing-offactionsinmeetingtherequiredthreshold.Inweighing
theiroptionspriortotakingsuchanaction,bothaplaintiffanditscounselshould
carefullyconsiderthesubstantiverequirementsaslitigantsoftenfaceanuphillbattle
intheirquestforinterlocutoryinjunctiverelief.

5
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