Evidence of Goodwill Essential in Passing Off Cases, Court of Appeal of Quebec Rules

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EVIDENCEOFGOODWILLESSENTIALINPASSINGOFFCASES,
COURTOFAPPEALOFQUEBECRULES

By
StellaSyrianos*
LEGERROBICRICHARD,L.L.P.

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TheCourtofAppealofQuebecrecentlydismissedanappealofadecisionof
theSuperiorCourtofQuebecwhichrejectedtheAppellant’spassing-offaction
relatingtoitsartists’paintbrushessoldunderthetrade-markARTISTS’CHOICE
design(DemcoManufacturingInc.v.FoyerD’ArtisanatRaymondInc.2006
QCCA52,Morissette,DufresneandTrudel,J.C.A.,January12
th,2006).
THEFACTS
Sometimeduringtheyear2000,theAppellant,DemcoManufacturingInc.
(“Demco”)verballycontractedwiththeRespondent,FoyerD’Artisanat
RaymondInc.(“Foyer”)tohavethelattersellitsartists’paintbrushes(imported
fromIndia)toretailstores.In2001,Foyerplacedandorderandsoldsaid
paintbrushes,asperthetermsoftheirverbalagreement.However,inearly2002,
DemcobecameawarethatFOYERceasedpurchasingitsproductsandshortly
thereafterdiscoveredthatFoyerwassellingaproductverysimilartoitsproduct
(importedfromChina),atalessexpensiveprice,inaparticularchainofretail
stores.
TheCourthighlightedoneelement:Demco’spaintbrusheswerepackagedin
transparentplasticbags,affixed,inthecenter,withitsregisteredtrade-mark
ARTISTS’CHOICE®,surroundedbyinformationregardingthecharacteristicsof
theproductaswelladistinctivevisualpresentationofgeometriccoloured
shapes,presumablyasanadded-valuefeatureofitsgoods.
Foyer’srivalproductwasstrikinglysimilartoDemco’sinthattheonlymain
differencewasthatthecenterofthetransparentpackagingfeaturedthe
element“Miracle”inascriptdifferentfromthatofDemco’s.




























































©CIPS,2006
*Lawyer,StellaSyrianosisamemberofLEGERROBICRICHARD,L.L.P.,amultidisciplinaryfirmof
lawyers,andpatentandtrade-markagents.Publication142.186.

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THESUPERIORCOURTOFQUEBECDECISION
Inreviewingtheabundantcaselawandprinciplesapplicabletopassingoff
cases,theCourtexaminedthethreebasiccriteriatobeestablished:
1.agoodwillorreputationattachedtoplaintiffsgoods,
inthemindofthepublic,suchthattheindiciain
questionisidentifiedwiththegoodsinquestion;
2.amisrepresentationbythedefendantleadingorlikely
toleadthepublictobelievethatthegoodsarethose
oforauthorizedbytheplaintiff;

3.theplaintiffhasorislikelytohavesuffereddamages.
Inreferencetoprovingthegoodwillassociatedtoaproduct,theJudgeheld
thatDemcofailedtodemonstrate,onabalanceofprobabilities,thatona
quickglanceofitspackagedpaintbrushes,thepublicautomaticallyidentified
themtoDemco.Infact,Demcoprovidednoevidenceofanygoodwillinits
paintbrushes.TheCourteventuallyproceededtorejectDemco’squestfora
permanentinjunction.
THECOURTOFAPPEALJUDGEMENT
DemcoallegedthatthefirstinstanceJudgeappliedseveralpassingoff
elementstoorigidly.Forexample,Demcoarguedthatitshouldnothavebeen
requiredtoprovegoodwillgivenitwassellingitsproductsforonlyaneight
monthperiod.TheCourtflatlyrejectedthisviewwhileconcludingthatitwas
tantamounttoanadmissionofthelackofdamagessufferedbyDemco.
Moreimportantly,theCourtofAppealagreedwiththeJudge’sfindingthat
Demcofurnishednoevidencewhatsoeverregardinganygoodwillinits
products.Quitetothecontrary,theCourtcommentedthetestimonyofoneof
Demco’switnesseswhostatedthatthepubliclikelypurchasedFoyer’s
paintbrushesbecausetheywereconsiderablycheaperthanDemco’s.The
Court’sinterpretationofsaidtestimonywasthatDemco’dropinsalesdidnot
equatetoamisrepresentationbyFoyerlikelytoleadthepublictobelieveits
wareswerethoseofDemco’s.
TheCourtheldthatthefirstinstanceJudgecommittednoerroratlawinhis
interpretationofthejurisprudenceapplicabletopassingoffcases.Moreover,

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theCourtheldthatDemconeverraisedthepossibilitythattheinferiorcourt
Judgehavingerredinfact,inaccordancewiththestandardofreviewofa
palpableandoverridingerror.TherewasevidencebeforetheJudgeupon
whichhecouldbasehisfindings.Assuch,theCourtofAppealrejected
Demco’sappeal.
CONCLUSION
Thiscaseisastarkreminderofthefundamentalcriteriarelatingtogoodwill
whichmustbeestablishedwithintheconfinesofpassingoffactions.Evenin
casessuchasthepresentone,wheretheoverallappearanceoftheproductsat
issuewerequasi-identical,suchanelementisinsufficient;therecipeforsuccess
insuchactionsbeginswithaplaintiff’scapacitytoprovethegoodwillattached
toitsgoods.

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