Deeming Clauses in Trade-Marks Act Confirmed as Interpretation Tools Only in Passing off Action, Federal Court Rules



DEEMINGCLAUSESINTRADE-MARKSACTCONFIRMEDASINTERPRETATION
TOOLSONLYINPASSINGOFFACTION,
FEDERALCOURTRULES

By
BarryGamache
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarkAgents
CentreCDPCapital
1001Square-Victoria-BlocE–8
thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:(514)9876242-Fax:(514)8457874
www.robic.ca-info@robic.com
Inarecentdecision,theFederalCourtofAppealhasruledthat”deeming”
clausesfoundinCanada’sTrade-marksAct(1985R.S.C.,c.T-13)donotprescribe
substantiverulesbutaresimplytobereferredtoininterpretingsectionsofthe
Act(EnterpriseCarandTruckRentalsLtd.etal.vs.EnterpriseRent-A-Car
Companyetal.,A-240-96F.C.A.,February11,1998(Pratte,RobertsonandGray)).
ThedecisionoftheFederalCourtofAppealconfirmedajudgmentrenderedin
1996bytheTrialDivisionwhichdisposedoftwoactionsfor”passingoff”under
paragraph7(b)oftheTrade-marksActconcerningtheuseoftheunregistered
trade-markENTERPRISEforcarandtruckrentalandleasingservices.Thefirst
actionwasbroughtbyEnterpriseRent-A-CarCompany,anAmerican
corporationanditsCanadiansubsidiaryagainstagroupofrelatedCanadian
companieswhichhadstartedtousethemarkENTERPRISEinCanadain
associationwithsimilarservices.Inthesecondaction,itwasthegroupof
CanadiancompanieswhichsuedEnterpriseRent-A-CarCompany,claiming
thatthelatterhadinfringedparagraph7(b)oftheActbyusingthemark
ENTERPRISEinCanada.TheCanadiancompaniesfurtherallegedthatEnterprise
Rent-A-CarCompanyhadviolatedtheprovisionsofparagraph7(a)oftheAct
bymakingmisleadingstatementstendingtodiscredititsbusiness.
Paragraph7(b)ofCanada’sTrade-marksActprovidesthatnopersonshalldirect
publicattentiontohiswares,servicesorbusinessinsuchawayastocauseorto
belikelytocauseconfusioninCanada,atthetimehecommencedsotodirect
attentiontothem,betweenhiswares,servicesorbusinessandthewares,
servicesorbusinessesofanother.Paragraph7(a)providesforitspartthatno
personshallmakeafalseormisleadingstatementtendingtodiscreditthe
business,waresorservicesofacompetitor.
DidEnterpriseRent-A-CarCompanyenjoygoodwillinCanada?Thetrialjudge



wrotethatgoodwillcouldbecreatedasaresultoftheuseofatrade-markin
Canadaandtheuseofatrade-markinanothercountrywherethetrade-mark
comestotheattentionofCanadians,eitherthroughuseorthroughadvertising
whichreachesCanadians.Moreover,whileEnterpriseRent-A-Car’sreputationin
Canadawaslimited,inthetrialjudge’sview,itwasnotnecessaryforthat
companytobefamousinorderforittoenjoytheprotectionofitsgoodwill:
“Theymaynotbefamousbuttheyareknowntosomemembersofthepublic”
(LevitzFurnitureCorp.andLevitzFurnitureCo.ofWashingtonInc.v.Levitz
FurnitureLtd.,ValueIndustriesLtd.andSilver,[1972]3W.W.R.65(B.C.S.C.).
ThetrialjudgeconcludedthatthemarkENTERPRISEwasalreadyknownbymany
CanadiansasthemarkusedbyEnterpriseRent-A-CarCompanyinassociation
withitsleasingserviceswhenthegroupofCanadiancompaniesstartedusing
themarkENTERPRISEinCanada;healsofoundthatEnterpriseRent-A-Car
CompanyenjoyedasufficientreputationinCanadatosucceedinitsaction
eventhoughthatcompanyhadneveractivelyengagedinanybusinessin
Canada.Inanadditionalfinding,thetrialjudgeconcludedthatthegroupof
CanadiancompanieshadnotyetusedthemarkENTERPRISEtoanextentthat
wouldhavegeneratedasignificantamountofgoodwillatthetimewhen
EnterpriseRent-A-CarCompanyinitiateditsuseofthemarkinCanada.
Consequently,inbothactions,thetrialjudgeruledinfavourofEnterpriseRent-A-
CarCompany.
Initsappeals,thegroupofCanadiancompaniesputforwardargumentsbased
onsections3,4and5oftheTrade-marksAct.Section3deemswhenatrade-
markistohavebeenadoptedinCanada;section4deemswhenatrade-mark
istohavebeenusedinCanadawhilesection5deemswhenatrade-markisto
havebeenmadeknowninCanada.ThegroupofCanadiancompaniesargued
beforetheCourtofappealthatinanactionbroughtbeforetheFederalCourt
underparagraph7(b)oftheAct,aplaintiffcannotsucceedinhisactionunless
heestablishesthat,beforedefendantcommencedtouseasimilarmark,he
himselfhadadopteditinaccordancewithsections3,4and5.Fromthe
Canadiancompanies’pointofview,sinceEnterpriseRent-A-CarCompanydid
notmeetthatpreliminarycondition,itshouldnothavesucceededinitsaction.
Asanadditionalargument,theCanadiancompaniespleadedthatunder
paragraph7(b),aplaintiffmustestablishthathe”owned”atrade-markinneed
ofprotectionandthatsuchtrade-markcanonlybe”acquiredbyadoptionand
use”.Inordertosucceedina”passingoff”actionunderparagraph7(b)ofthe
Act,aplaintiffmustnecessarilyprovethatheisdeemedbysection3tohave
adoptedthetrade-markinquestion:accordingtothegroupofCanadian
companies,EnterpriseRent-A-CarCompanyhadnotmetthattest.
TheseargumentswerenotfavourablyreceivedbytheFederalCourtofAppeal:
intheCourt’sopinion,sections3,4and5oftheActdidnotprescribesubstantive



rulesgoverningtheacquisitionanduseoftrade-marks;accordingtotheCourt,
“thesesectionsaregroupedwithsections2and6undertheheading
“interpretation”.Section2containsdefinitions.Sections3,4and5are”deeming”
clauseswhichsimplydescribeaspecialmeaningtocertainphrases.Thesethree
sectionsmustbeappliedininterpretingthesectionsoftheActwherethose
phrasesareused.Otherwise,theyhavenoroletoplay”.TheCourtremindedthe
partiesthata”deeming”clauseistoimposeameaning,tocausesomethingto
betakentobedifferentfromthatwhichitmighthavebeenintheabsenceof
theclause.
TheCourt’sdecisionisanimportantreminderthatsections3,4and5oftheAct
donotcreate”rights”orimpose”obligations”topartiesina”passingoff”action;
theyaresimplytobereferredtowheninterpretingtheTrade-marksAct.Inthe
Court’sview,thesesectionsdonotestablishpreconditionsregarding”use”or
“adoption”ofatrade-markbeforedecidingthemeritsofa”passingoff”action
intendedtoprotectthegoodwillattachedtoatrade-mark.
Publishedat(1998),12W.I.P.R.139-140underthetitleFederalCourtRulesonthe
Meaningof‘Deeming’ClausesinTrade-MarksAct.
LEGERROBICRICHARD,1998.



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