Insufficient Evidence of Goodwill Leads to Dismissal of a Passing off Action

2003-01-01

INSUFFICIENTEVIDENCEOFGOODWILLLEADSTODISMISSALOFAPASSINGOFF
ACTION

AlexandraSteele
LEGERROBICRICHARD,Lawyers
ROBIC,Patent&TrademarkAgents
CentreCDPCapital
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Tel.:(514)9876242-Fax:(514)8457874
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Inarecentcaseopposingtwobusinessschools,theFederalCourtofCanada
wasseizedofanactionforpassing-offregardingthePlaintiff’sunregistered
trade-markCANADIANBUSINESSCOLLEGE.Afterreviewingtheevidenceand
thecaselawonpassing-off,theCourtdismissedtheaction,rulingthatthe
Plaintiffhadnotestablisheditsreputationorgoodwillinandforthetrade-
markCANADIANBUSINESSCOLLEGEatthetimetheDefendantstartedusing
thesaidtrade-mark(CanadianBusinessSchoolInc.v.SunriseAcademyInc.,
2002FCT1294,December12,2002,Layden-StevensonJ.).
Thefacts
ThePlaintiffwasincorporatedin1992underthename“CanadianBusiness
SchoolInc.”.ThePlaintiffwasavocationalschoollocatedinthecityof
Toronto,Ontarioanditofferedavarietyofcoursestothepublic,suchas
business,computers,etc.From1992to1998,Plaintiffwasprohibitedfromusing
theword“College”astheOntarioministerialauthorityforeducationdidnot
allowvocationalschoolstousetheword“College”intheirnameorto
describethemselves.However,in1998,theministerialauthoritychangedits
policyandthePlaintiffcommenced,inJuly1998,topromoteitsservices
underthetrade-markCANADIANBUSINESSCOLLEGE.Itemssuchas
pamphlets,letterheadandbusinesscards,certificates,registrationforms,
bearingtheCANADIANBUSSINESSCOLLEGEtrade-mark,werefirstusedasof
July1998.OnSeptember17,1998,thePlaintiffregisteredthe“CANADIAN
BUSINESSCOLLEGE”namewiththeprovincialauthoritiesforeducationand
businessrespectively.
Defendant,ontheotherhand,wasanemploymentagencythat
commencedofferingvocationalschoolservicesin1997.TheDefendant
operatedinthecityofToronto,Ontario.OnAugust19,1998,theDefendant
wasinformedbytheOntarioministerialauthorityforeducationthatitcould
usetheword“College”initsnameortodescribeitsservicesandon

September14,1998,theDefendantregisteredtheCANADIANBUSINESS
SCHOOLnamewiththeprovincialauthorityforbusiness.TheDefendantfirst
promoteditsservicesundertheCANADIANBUSINESSCOLLEGEtrade-markin
anewspaperadvertisementinSeptember1998,andthenagaininOctober
1998.
Theissuesatbar
TheCourtwasseizedofdecidingwhether,atthetimetheDefendantfirst
begantodirectattentiontoitsservicesundertheCANADIANBUSINESS
COLLEGEtrade-mark,thePlaintiffhadacquiredsufficientreputationand
goodwilltoestablishthattheDefendanthadpassed-offitsservicesasthose
ofthePlaintiffpursuanttoSection7b)oftheTrade-MarksAct,R.S.C.1985,c.
T-13.
TheFederalCourtruling

AsitunequivocallyappearedfromtheevidencebeforetheCourt,boththe
PlaintiffandtheDefendantusedthetrade-markandbusinessname
CANADIANBUSINESSCOLLEGEinassociationwiththesameservices,namely
vocationaleducationservices.TheevidencefurthershowedthatthePlaintiff
hadcommencedusingtheCANADIANBUSINESSCOLLEGEtrade-marksome
monthsbeforetheDefendantbeganitsuseofthesaidtrade-mark.
TheCourtbeganwithareviewofthelawregardingtrade-marks.Trade-mark
rights,whetherstatutoryoratcommonlaw,areacquiredthroughadoption
anduse.Aperson’strade-markmustbedistinctive,asthereisnoprotectable
rightwithoutdistinctiveness.Intheeventthatatrade-markisnotaninvented
orcoinedword,i.e.thatitmayhavedictionarymeanings,suchasthetrade-
markCANADIANBUSINESSCOLLEGE,itisuptothetrade-markownertoshow
thatthetrade-markhasacquiredasecondarymeaning,thatthetrade-mark
ownerhas“[…]builtupadistinctivereputationandgoodwillforitselfin
associationwiththetrade-mark[…]”.
TheCourtthenreviewedtheessentialelementsofasuccessfulpassing-off
action,namely:
-theexistenceofgoodwill;
-deceptiontothepublicduetomisrepresentation;and
-actualorpotentialdamage
UnderCanadianlaw,passing-offoccurswhenaperson’sbusiness,reputation
orgoodwillmaylikelybeinjuredbyacompetitor’smisrepresentation,inwhich

thecompetitorcreatesanillusionofsameness,orsimilarity,totheperson’s
waresorservices,thuscausingconfusiontotheconsumer.Theintentionto
misrepresentisnotrelevant:theexistenceofconfusion,orthelikelihood
thereof,issufficienttogiverisetoanactionforpassingoff.TheCourtshave
definedtheterm“goodwill”asthe“fixedandfavourableconsiderationof
customersarisingfromestablishedandwellconductedbusiness”.TheCourt
insistedofthefactthatthedoctrineofpassing-offshouldnotbeusedto
restricttrade.
Havingcompleteditsreviewoftheapplicablecaselaw,theCourtreverted
totheissueatbar,namelywhetherthePlaintiffhadacquiredsufficient
reputationandgoodwillinthenameCANADIANBUSINESSCOLLEGE,tothe
extentthatwhentheDefendantfirstadoptedandusedtheCANADIAN
BUSINESSname,itactedinsuchawaytocause,orbelikelytocause,
confusionbetweenitsservicesandthoseofthePlaintiff.Theevidence
showedthattheDefendant’sadoptionofCANADIANBUSINESSCOLLEGEwas
donewithoutknowledgeofthePlaintiff’suseandonlyafewmonthsafterthe
Plaintiffhadcommencedusingsame.TheCourtruledthattherelevant
markettodeterminewhethertherewasconfusionwasthebodyofstudentsin
thegreaterTorontoarea,sincethatiswhereboththePlaintiffandthe
Defendantcarriedouttheirbusinessactivities.TheCourtfurtherdecidedthat
thetrade-markCANADIANBUSINESSCOLLEGEwaspartiallydescriptiveofthe
servicesprovidedandthatthePlaintiffhadtheburdentoprovethatitstrade-
markandtrade-namehadacquiredasecondarymeaning.
TheCourtruledthattheDefendant’switnessesweremorecredibleintheir
testimonyregardingtherelevantfacts:theevidenceofthePlaintiffhadnot
withstoodcross-examinationattrial.Moreover,thePlaintiffhadfailedtoshow
knowledgeorreputation,intherelevantmarket,ofitsCANADIANBUSINESS
COLLEGEtrade-mark.TheCourtdecidedthatthePlaintiffhadnotestablished
itsgoodwillpriortotheDefendant’sfirstadoptionanduse,inSeptember1998,
oftheCANADIANBUSINESSCOLLEGEtrade-mark.TheCourtfurtherruledthat
whenamarkishighlydescriptive,thereisaninevitableriskofconfusion.Even
thoughconfusiondidexistbetweentheparties’trade-marks,thePlaintiff
couldnotbesuccessfulintheabsenceofevidenceofgoodwill.TheCourt
thereforedismissedthePlaintiff’sactionforpassing-off.
Conclusion
Thiscaseservestoremindlitigantsoftheonerousburdenthatfallsonthe
Plaintiffinapassing-offaction.Theremustbesufficientevidencetosupporta
Plaintiff’sallegationofreputationandgoodwillandintheabsencethereof,
theCourtswillnothesitatetodismissanactionforpassing-off,despite

evidenceofconfusionbetweentheparties’trade-marksanddespite
evidenceofaPlaintiff’spriorrightsinthetrade-markinsuit.

©LEGERROBICRICHARD,2003.
Publishedat(2003),17-4WorldIntellectualPropertyReport4-5underthetitlePassing-Off
DismissedforInsufficientEvidenceofGoodwill.Publication142.149.

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