Federal Court of Appeal confirms no presumed damages in passing of action

FEDERALCOURTOFAPPEALCONFIRMSNOPRESUMEDDAMAGE
SIN
PASSINGOFFACTION

STELLASYRIANOS*
LEGERROBICRICHARD,
LLP
L
AWYERS,PATENT&TRADEMARKAGENTS

Theimportanceofprovingpotentialoractualdamagesinpassingoffcaseswas
highlightedbytheFederalCourtofAppealinaveryrecentdecision,inwhichit
upheldalowercourtrulingrejectingAppellant’sattemptatseekinginjunctiverelief
basedonaclaimforpassingoffofitsunregisteredtrade-mark
“PharmaCommunications”[PharmacommunicationsHoldingsInc.v.Avencia
InternationalInc.etals,2009FCA144(A-482-08)May5
th,2009].

TheFacts
TheApplicant,PharmacommunicationsHoldingsInc.,incorporatedsinceSeptember
26,1995,hadlicenseduseofitsunregisteredtrade-mark“PharmaCommunications”
toarelatedentity,PGI,alsoincorporatedsince1995.TheApplicantalsoallegedthe
trade-mark“PharmaCommunications”hadbeenusedbyitspredecessorcorporations
sinceDecember1982andthatthetrade-markhasalwaysbeenusedinassociation
withtheprovisionofmarketing,advertisingandrelatedconsultingservicestothe
pharmaceuticalindustryinCanada.AsforPGI,accordingtotheApplicant,itisa
marketingcompanyforpharmaceuticalcompaniesinCanada,anichemarketof
approximately100companies.
TheRespondent,AvenciaInternationalInc.wasincorporatedonJanuary20,2004
andregisteredthebusinessname“Pharmacomm”onDecember2,2004andsince
then,hasbeenoperatinginOntariounderthatname.Avenciasubmiteditisan
advertisingagencywhichincludesbrandconsultation,mediaadvertising,product
promotionandsalestechniquesservicestoitsclients.

Therewassomedisputebetweenthepartiesastothenatureoftheirrespective
businessesbuttheCourtofAppealdecidedthiselementwasnotrelevanttothe

©CIPS,2009.*Lawyerandtrade-markagent,StellaSyrianosisamemberofLEGERROBICRICHARD,L.L.P.,a
multidisciplinaryfirmoflawyers,andpatentandtrademarkagents.PublishedintheJuly2009issueof
WorldIntellectualPropertyReport.Publication142.225.

2
appealbeforeitinsofarasbothpartiesprovideservicestothepharmaceutical
industry.
FederalCourtdecision
TheFederalCourtonlydealtwiththeissueofwhetherornotAvenciawasliablefor
statutorypassingoffundersection7(b)oftheTrade-MarksActasconcernedonthe
onehand,itsuseofthebusinessnamePharmaCommandontheother,Applicant’s
useofitsunregisteredtrade-mark“PharmaCommunications”.

Afterreviewingtheevidenceandargumentsadducedbythepartiesandinrejecting
theApplicant’sapplication,theFederalCourtfirmlystatedthatitwasunnecessaryto
consideriftheApplicanthadavalidandenforceabletrade-marknorifthefirsttwo
elementstoapassingoffactionwedemonstrated(establishedgoodwilland
deceptiontothepublicduetoamisrepresentation)becausetheApplicantclearly
failedtomeetthethirdelementregardingactualorpotentialdamages.

FederalCourtofAppealdecision
ThemainissuebeforetheFederalCourtofAppealwaswhetherornotthe
applicationsjudgeappliedthecorrecttestregardingpassingoffclaimsundersection
7(b)oftheTrade-MarksAct,morespecifically,todetermineifitisnecessaryina
passingoffactionforaplaintifftoestablishactualorpotentialdamagesresultingfrom
anallegedinfringement.
WhiletheAppellantraisedotherissues,theCourtopineditdidnotneedtoaddress
thesesubsidiarymattersiftheAppellantwasunsuccessfulonthemainissueof
damages.
Initssubmissions,theAppellantarguedtheapplicationsjudgehadcommittedan
errorbyapplyingacommonlawtesttoastatutoryclaimforpassingoffinsofarasin
thecaseofthelatter,acourtfindingofactualorpotentialdamagestoaclaimantwas
notrequired.However,theAppellantacknowledgedthattheFederalCourtofAppeal
hadheldotherwiseinBMWCanadaInc.v.NissanCanadaInc.(2007FCA255
(CanLII),2007FCA255,60C.P.R.(4th)181)butsubmittedthatthiscase(inwhich
theCourtstatedthatactualorpotentialdamagescannotbepresumedandtheremust
beevidenceprovingsame)shouldnotbefollowed.
TheFederalCourtofAppealheldthattheAppellantfailedtodemonstratethatthe
BMWCanadadecisionwasmanifestlywronginadditiontostatingthattherewereno
longeranysignificantdifferencesbetweenthestatuteandthecommonlawinrelation
topassingoffcases.

3
TheFederalCourtalsoreferredtothetripartitetestforestablishingpassingoff
determinedbytheSupremeCourtofCanadaintheCiba-Geigydecision([1992]3
S.C.R.120at132)bystatingthatwhileitwasacommonlawpassingofftest,ithad
neverthelesssubsequentlybeenappliedbytheFederalCourtinnumerousstatutory
claims.
TheFederalCourtofAppealfurtherstatedthatmorerecently,intheLEGOdecision
(KirkbiAGv.RitvikHoldingsInc.,2005SCC65,[2005]3S.C.R.302)theSupreme
Courtaffirmedthetripartitetest,includingtherequirementofprovingactualor
potentialdamagesandthatthesameprinciplesinformboththecommonlawandthe
statute.
Fortheforegoingreasons,theFederalCourtofAppealconcludedthattheBMW
CanadadecisionwasconsistentwiththeSupremeCourt’sjurisprudenceonpassing
offanditshouldthusbefollowed.
TheAppellantalsoarguedthatinthealternative,itwasunnecessarytoadduce
evidenceofactualorpotentialdamagesinsofarastheCourtisentitledtopresume
samewherealikelihoodofconfusionhasbeendemonstrated.

TheFederalCourtofAppealrespondedthatthisargumentwasequallyrejectedinthe
BMWCanadadecisionandfurtheraddedthattheAppellanthadnotgivenanyreason
whythisdecisionshouldnotbefollowedonthiselement.TheCourtalsomentioned
thattheAppellanthadnotchallengedthefindingthatitlednoevidenceofactualof
potentialdamages.
Indisposingoftheappeal,theFederalCourtofAppealhelditwasevidentthatthe
Appellant’sclaimforstatutorypassingoffwasunabletosucceed.

Conclusion
ThisFederalCourtofAppealdecisionmayserveasacautionaryremindertofuture
litigantsthatdamagesinpassingoffcases,beitwithintheframeworkofthecommon
laworthestatute,arenottobepresumed,includingincaseswherelikelihoodof
confusionhasbeenestablished.Itwouldalsoappeartoconstituteyetanother
indicationofthehardshipfacingplaintiffswhoseekreliefbasedonpassingoffclaims.

4

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