Enforcing Trade-Mark Rights through the Criminal Code



ENFORCINGTRADE-MARKRIGHTSTHROUGHTHECRIMINALCODE

BobH.Sotiriadis*
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

Introduction.Section409(1)oftheCanadianCriminalCodemakesitan
offenceforapersontohaveinhispossessionortodisposeof,adie,block,
machineorotherinstrumentsdesignedorintendedtobeusedinforginga
trademark.RelatedsectionsoftheCriminalCodesetoutthedefinitionof
forgeryofatrade-markasbeingthereproductioninanymannerofatrade-
markoramarksonearlyresemblingitastobecalculatedtodeceive,orto
falsifyinanymanneragenuinetrade-mark.
TheseseldominvokedprovisionsoftheCriminalCoderelatingtotrade-mark
infringementwereplacedunderscrutinyinaveryrecentdecisionofthe
CriminalDivisionoftheCourtofQuebecinR.v.ImPencoLtd.[November7,
1990,Que.Ct.-Crim.Div.].
RelationshipoftheParties.Impencoisamanufacturerofboxesofallkinds
andisnotengagedinanybusinessrelatedtothepotentialcontentsofthe
boxesthatitmanufactures.
ThecomplainantwasSeikoTimeCanadaInc.(“Seiko”).Seikoisaregistered
userinCanadaofthetrade-mark”Seiko”whichisownedbyHattoriSeiko,a
JapaneseCorporation.Itwasnotedinthecourt’sjudgmentthatHattoriSeiko
doesnotownatrade-markwithrespecttoboxesandthatitsregistereduser,
thecomplainantinthecase,didnotdealinboxes.Itwasfoundthatthe
manufactureofboxeswasanactivitythatwascompletelyforeigntothe
businessofthecomplainant.
OriginallySeikohadcontractedwithImpencoforthemanufactureofboxes
designedtocontainwatchessolddirectlybySeiko.Thepartiesthenhada
fallingoutoverpricesandtheystoppeddoingbusinesstogether,atSeiko’s



















































*
LEGERROBICRICHARD,1991.
Lawyer,BobH.SotiriadisisaseniorpartnerinthelawfirmLEGERROBICRICHARD,g.p.andin
thepatentandtrademarkagencyfirmROBIC,g.p.Publishedat(1991),8Business&theLaw.
1-3.Publication116.003.



request.ThecourtfoundthatonceSeikoadvisedImpencothatitnolonger
wishedtoorderboxesfromit,inearly1984,Impencoimmediatelyremoved
themould,whichhadbeenfurnishedbySeiko,fromitsmouldingmachined,
storeditwithanumberofmouldsinthebackofitsplantandneverproduced
anyorderwithitagain.Itappearedfromtheevidencethatthemouldin
questionwasobsolete,oflittlevalue,andthatSeikomadenoseriousattempt
toretrieveit.
AftertheterminationoftherelationshipbetweenSeikoandImpenco,
Impencocontinuedtomanufactureboxesbearingthename”Seiko”butused
itsownmouldsandmouldingtodoso.
FindingsofFact.Subparagraph2ofsection409oftheCriminalCode
foreseesagoodfaithdefencewhichmaybeinvokedbytheaccusedto
negatethemensreathatseemstoberequiredinparagraph1ofthesaid
section.Itwasimportant,therefore,thattheaccuseddemonstratethatit
manufacturedtheSeikoboxesintheordinarycourseofitsbusiness.Infact,
theaccusedsuccessfullydemonstratedtothecourtthatitwasingoodfaith
atalltimessincethewatchboxesthatweremanufacturedwereclearly
identifiedashavingbeenmanufacturedbyImpencoLtd.Thiswasdoneby
meansofanengravingtothiseffectwhichappearedontheundersideof
eachboxitmanufactured.Infact,Impencoevenmadereferencetothe
numberofthemoulditusedformakingeachbox.Thecourttookthese
findingsasademonstrationthatImpencoopenlymanufactureditsboxes
andhadnointenttohidetheirorigin.
Impencoappliedthename”Seiko”toitsboxesthroughtheuseofasmalldie
whichfittedontotheImpencomoulds,andwhichwasremovableatwill.At
trialSeikowasobligedtoadmitthattheboxesImpencohadsoldbearingthe
Seikomark,weresoldtodealersofauthentic,albeit”greymarket”,Seiko
watches.ItwasalsoestablishedthatSeikohadneverauthorizedthe
purchasersofImpenco’sboxestosellSeikowatchesinCanada.
SeikohadalreadylostaSupremeCourtdecisiononthequestionofparallel
importationorgreymarketingofgoodsandassuch,couldnotpursuethe
purchasersofImpenco’sboxes.Seikodecided,instead,toattempttostop
thepracticeofthesaleofauthenticSeikowatchesobtainedfromsources
otherthanSeikobyinvokingtheprovisionsoftheCriminalCoderelatingto
trade-markinfringementandtheforgeryoftrade-marks.
LegalAspectsConsidered.Variouslegalaspectsoftrade-marklawwere
consideredbythecourtinrenderingitsjudgment.Thecourthadfirstto
determinewhatthemeaningoftheword”trade-mark”wastobeunderthe



CriminalCode.ItwassubmittedbyImpenco,andacceptedbythecourt,
thattheword”trade-mark”intheprovisionsrelevanttothecasecarriedthe
samemeaningasthatintheTrademarksAct.Thecourtreaffirmedthe
principlethattheaccusedinsuchcases,isnotdeprivedofthebenefitofthe
defencesthatareopeninacivilactionforinfringement.Impencowas
permitted,therefore,toarguethattheownerofatrade-markwhofileda
complaintundersection409insuchcases,hasnorightsasagainstthe
accusedunderthelawrelatingtotrade-marksinthecivilsphere.
ThecourtinitsjudgmentmademuchreferencetoConsumersDistributingCo.
Ltd.v.SeikoTimeCanadaLtd.[1984]1S.C.R.583inwhichSeikoarguedto
restraintheConsumersDistributingCompanyfromsellingSeikowatcheswhen
itwasnotanauthorizeddealer.Consumerswasinthebusinessofselling
genuineSeikowatchesbuthadobtainedthemoutsideofSeiko’sdistribution
network.TheSupremeCourtofCanadadismissedSeiko’sactiononthispoint.
Impenco,therefore,arguedthatifSeikowouldhavenorecourseagainstit
undertheTrademarksActnorpursuanttotheextendeddoctriceof”passing
off”,thenithadnorightasacomplainantundertheCriminalCode.
Itwasunderlinedbythecourtinitsjudgmentthatthecompanythatownsthe
trade-markregistrations,HattoriSeikoofJapan,manufacturesauthentic
watchesandsellsthemtopersonswhointurnsellthesamewatchesin
CanadaoutsideofSeikoCanada’sdistributionnetwork.Thecourtheldthat
thiswasnotthefaultoftheaccusedherein.
ImpencoarguedthatajudgmentinfavouroftheCrownwouldamountto
blockingunauthorizeddealersofgenuineSeikowatchesbyattackingthe
companythatpreparestheboxesinwhichthoseotherwiselegalwatches
weretobesoldtothepublic.
ItwasfurthersubmittedbyImpenco,andacceptedbythecourt,that
infringementmayonlybefoundinrespectofspuriousgoods.Thecourt
concludedthatsincetheSupremeCourthadheldthatgreymarketvendors
actlegallyandinaccordancewithCanadiancompetitionprinciples,and
thesesamevendorshappentobethecustomerstowhomImpencosells
boxesmarkedwithSeiko’sname,thenSeikohadnorightsagainstthe
defendantcorporationwithrespecttoinfringement.
LegalFindings.Thelackofacriminalintentis,therefore,adefencewhichis
opentoanaccusedinthesecases.Suchadefenceexistsinadditiontothe
goodfaithdefenceforeseeninsection409(2)andthedefenceofconsentof
thetrade-markowner.



Afterconsideringalloftheevidence,thecourtfoundthatacriminalintent
hadnotbeenproved.Italsofoundthattheaccusedhadactedingood
faithandintheordinarycourseofitsbusiness.Finally,thecourtconcluded
thattheownerofthetrade-markshadconsented,atleasttacitly,to
Impenco’suseofsame.
ThecourtinferredSeiko’sconsentfromthemannerinwhichitoperatedits
distributionsystem.Ineffect,Seikodealers,bothauthorizedandunauthorized
areresponsibleforthepackaginganddisplayoftheSeikowatchesthatthey
sell.InfactthecourtwentsofarastostatethattheCrowninsuchcases,has
theburdenofprovingthattheowner’sconsenthadnotbeengiven.
Conclusion.Thiscaseisoneoftheonlycasesweknowofthatspecifically
concernssection409andtherelatedprovisionsoftheCriminalCOde.It
should,therefore,beofparticularinteresttoanypartywishingtousethe
CriminalCodewithaviewtoenforcingitstrade-markrightsintheCanadian
market-place.



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