Report and comments on NISSAN Canada inc V. BMW Canada inc. 2007 FCA 255

R
EPORTANDCOMMENTSON
NISSANCANADAINC.
V.BMWCANADAINC.,2007FCA255

MARCELNAUD*
LEGERROBICRICHARD,
L.L.P.
L
AWYERS,PATENTANDTRADEMARKAGENTS

Keyissueswithluxurycars
IntherecentcasebetweenNissanCanadaInc.andBMWCanadaInc.,theFederal
CourtofAppealstatedthatforthepresenceofamarkinadvertisementand
promotionalmaterialtobesufficientlyassociatedwithwarestoconstituteuse,the
advertisementsandpromotionalmaterialwouldhavetobegivenatthetimeof
transferofthepropertyinorpossessionofthewaresinquestion.TheCourtalso
statedthatabifurcationorderdoesnotrelieveaplaintifffromthenecessityof
provingtheexistenceofdamagesasanelementofhiscauseofactioninarecourse
inpassingoff.MarcelNaudreportsonthecircumstancesthatleadtothese
conclusionsandcommentsonpossibleeffectsthattheymayhave.
FACTUALBACKGROUND
Inthiscase,theRespondentsBMW
1soughttopreventtheAppellantNissan2from
displayingtheletterMaloneinadvertisingmaterialrelatedtoluxuryautomobiles.
Morespecifically,BMWfiledanactiononAugust12,2005topreventNissanfrom
selling,distributingoradvertisingautomobiles,partsandaccessoriesinassociation
withthetrade-marksMandM6.Itreliedonss.7(b),20and22oftheTrade-marks
Act
3.BMWclaimeduseoftheMandM6trademarksinCanadaatleastsince1987.
ItisworthnotingthattheletterMandthecombinationM6werenotregisteredas
trade-marksinCanadabyBMW,butapplicationsforboth
4werefiledafter



















































©CIPS,2008.*Lawyer,MarcelNaudisamemberofLEGERROBICRICHARD,L.L.P.,amultidisciplinaryfirmof
lawyers,andpatentandtrademarkagents.Publication173.018.
1BMWCanadaInc.anditsparentcompanyBayerischeMotorenWerkeAktiengesellschaft(together
referredtoas“BMW”).
2NissanCanadaInc.(hereinafter“Nissan”).3R.S.,1985,c.T-13.4AndafewotherssuchasMROADSTER,MCOUPE,MSPORTPACKAGE,MEXECUTIVE
PACKAGEandMPERFORMANCEEDITION.

2
commencementoftheaction.However,BMWhadregisteredtrade-marksforMand
design,M3,M5,MSERIES,MPOWERdesign,M-THEMOSTPOWERFUL
LETTERINTHEWORLDandM-THEMOSTPOWERFULLETTER,before
commencementoftheaction.
BMWpresentedtheMbrandasitspremiumbrand,standingfor“Mortorsport”andits
racingheritage.TheMseriesofautomobilesincorporatedtechnologiesoriginally
developedforBMWracingcars.Thisallowedittotargethighendmarketsegments
andcommandahighersalesprice.InBMW’sview,thesespecialvehicleshave
becomeknownandreferredtoas“Mcars”,notonlywithinBMW,butalsointhe
market,becauseofBMW’ssalesandpromotionalactivitiessurroundingthem.
TheM6car,whichcouldalsobedescribedastheMeditionofBMW’s6series,was
thefirstMcarpromotedandsoldbyBMWinCanada,whichwasthenfollowedby
theM3andM5series.BMWMcarsweremarkedwiththeManddesignmarkbut
noneweremarkedwithastand-aloneMlettermark
5.
Ontheotherhand,Nissanisthelicenseeoftheregisteredtrade-marksM45and
M35
6,usedforsomevehiclesinitsluxurydivision,Infinity.Thesevehicleshave
beenreferredtobysomeautomobilejournalistsas“Mcars”or“InfinitiMcars”,but
noneweremarkedwithastand-aloneMletter,orwithanyofthetrade-marks
claimedbyBMW.Insomeofits2005and2006advertisinginitiatives,Nissan
displayedtheletterMalonewithgreatemphasisinordertopromoteNissan’snew
editionsofInfinitiMmodels.
WithinNissan,M6isadescriptorthatdesignatesanoptionalsportspackage
providingamanualsixspeedtransmissionavailabletoInfinitiG35purchasers.
WhenNissanintroduceditsM6package,BMWwasnotsellingnewM6vehiclesin
Canadabuthadplanstoreintroducethemodelin2006.
TRIALDECISION
Inhisreasons
7,MacKayD.J.foundthatBMWfailedtoestablishitsclaimsbasedon
ss.208and229butthatNissanwasliableforstatutorypassingoffunderpar.7(b)for


















































5BMWclaimedthatwhenitwasusingtheMandDesignmark,itwasalsousingthestand-aloneM
lettertrade-mark.
6Aftercommencementoftheaction,Nissan’sparentcompanyalsoappliedtheregistrationofthe
marksM20,M37,M40,M48,M50,M55andM56inCanada.
7BMWCanadaInc.v.NissanCanadaInc.,2007FC262(CanLII).8Thejudgefoundthattherewas“nolikelihoodofconfusionarisingbythedefendant’suseofthe
letterMorthedescriptorM6with[BMW’s]registeredmarksM3,M5andManddesign”.
9EvidencewasviewedasinsufficienttoconcludethatNissan“used[BMW’s]registeredmarksor
othercloselysimilarmarksinamannerlikelytodepreciatethevalueofBMW’sgoodwillinits
registeredmarks.”

3
theuseoftheletterMaloneandM6astrade-marksforautomobiles,partsand
accessories.
ThejudgestatedthatBMW’sunregisteredMtrade-markhadbeen“inusein
advertisingandpromotionalmaterialsandinpromotionsatM-Night
10”andhe
describedBMW’sMcarsas“waresadvertisedbytheMtrade-mark”11.
Inordertosucceedinitspassingoffaction,BMWhadtoshow(1)theexistenceof
goodwill,(2)deceptionofthepublicduetoamisrepresentationbyNissanand(3)
actualorpotentialdamages.
Withrespecttogoodwill,thejudgestatedthatthe“awarenessofspecialinterest
groups
12inarelativelysmallmarketofconsumersissufficientinthiscaseto
establishBMW’sgoodwillinthetwocommonlawtrade-marksitclaimsandhas
used”.
Withrespecttodeceptionofthepublicduetoamisrepresentation,thejudgefound
that,whetherintentionalornot,confusionwascausedbyNissan’suseoftheletter
MaloneandofM6forwares,automobilesandpartssimilartothoseofBMW.
Withrespecttoactualorpotentialdamages,thejudgepresumed,subjecttofurther
consideration,thattherewouldbedamages.Noevidenceofdamageswasmade
duringtrialsincethepartiesobtainedabifurcationorderwhichforesawahearingon
aReferenceondamagesintheeventthatliabilitywasfound.
DECISIONBYTHECOURTOFAPPEAL
Onappeal
13,inthereasonsforjudgementdeliveredbyRichardC.J.andconcurred
inbyLindenJ.A.andPelletierJ.A.,theCourtheldthatthetrialjudgeerredinlawin
pursuingaparagraph7(b)analysiswithoutfirstestablishingthattheMandM6
markswerevalidandenforceabletrade-marksinlightofthefactthattherewas“no
evidenceofuseonwhichthetrialjudgecouldrelytoconcludethattheMandM6
marks[were]unregisteredtrade-marks”withinthemeaningofs.2oftheAct.


















































10M-NightwasaneventheldannuallyinMontrealfrom2001to2005aspartofactivitiesrelatedto
theFormulaOnerace,topromoteBMW’sMcars.
11ThejudgeconsideredthattheuseoftheManddesignmarkonBMWMcarsdidnotamounttouse
oftheMmarkbyitself,bystatingatpar.59ofthedecisionthat“theuseofthedesignmark,a
registeredtrade-mark,howeverfrequentlyitappears,cannotinlawbeconsideredasuseoftheM
mark,anunregisteredmarkclaimedbyBMW.Similarly,useoftheletterMinothertrade-marksof
BMW,inalphanumericcombinationslikeM3,M5,orwithwords,suchasMRoadster,cannotbe
considereduseoftheMalonemarkinassessingtheplaintiffs’claims.”
12Autojournalistsandluxuryhighperformancecarenthusiasts,particularlyBMWowners.13NissanCanadaInc.v.BMWCanadaInc.,2007FCA255(CanLII).

4
Insodoing,theCourt,asithadalreadydoneinthepast14,insistedonthe
importanceforaplaintifftoprovepossessionofavalid,enforceabletrade-mark
(registeredornot)inordertouseparagraph7(b)asacauseofaction.Here,the
evidenceshowedthatMandM6werenotmarkedonBMW’swaresthemselvesnor
onthepackagesinwhichtheyweredistributed.TheFCAappliedtheruleassetout
insection4(1)oftheActconcerninguseasitappliedtowares,andwhichprovides
that:
“Atrade-markisdeemedtobeusedinassociationwithwaresif,atthetimeof
thetransferofthepropertyinorpossessionofthewares,inthenormal
courseoftrade,itismarkedonthewares
themselvesoronthepackagesin
whichtheyaredistributedoritisinanyothermannersoassociated
withthe
waresthatnotice
oftheassociationisthengiventothepersontowhomthe
propertyorpossessionistransferred.”
WithrespecttotheMletteralone,BMWdisplayeditinadvertisementsand
promotionalmaterialsbuttheCourtsaidthattherewasnoevidenceastowhen
theseadvertisementsandpromotionalmaterialsweredistributedinCanada.In
findingthatthiswasnotsufficienttoqualifyas“use”,theCourtstatedthatthe
advertisementsandpromotionalmaterialdisplayingthemarkhavetobegivenatthe
timeoftransferofthepropertyinorpossessionoftherelatedwares,anditreferred
topastdecisionsinsupportofthisstatement
15.
Inaddition,theCourtdeterminedthatactualorpotentialdamagestoBMW,oneof
theessentialelementsinfindingliabilityunderparagraph7(b),werenot
established.TheCourtwasoftheopinionthatthetrialjudgeerredinlawin
assumingthattherewouldbedamagesandinconsideringthatabifurcationorder
couldrelieveBMWfromitsburdentoprove,intheportionofthetrialdealingwith
liabilityissues,theexistenceofactualorpotentialdamagesasanelementofits
causeofaction.
COMMENTS
TheFCAconfirmedthatsection4(1)appliestounregisteredtrade-marksinmatterof
statutorypassingoffundersection7(b)oftheAct.Thismeansthatusehastobe
provenandthatthecaselawundersection4(1)hastobeapplied.


















































14SeeKirkbiAGv.RitvikHoldingsInc.,2003FCA297(CanLII),affirmedin2005SCC65(CanLII).15ClairolInternationalCorp.etal.v.ThomasSupply&EquipmentCo.Ltd.etal.(1968),55C.P.R.
176at190(Can.Ex.Ct.)andGeneralMillsCanadaLtd.v.Procter&GambleInc.,(1985),6C.P.R.
(3d)551(T.M.Opp.Bd.)

5
Thequestionofwhenthereisanassociationsufficientenoughtosatisfythe
requirementofsection4(1)isstilltobedeterminedonacasebycasebasis16.
Iftheissueofuseofanunregisteredtrade-markisapotentialproblem,litigants
shouldalwaysconsideraddingcommonlawpassingoffasanothercauseofaction.
Astothequestionofdamages,itisdifficulttounderstandthereasoningoftheCourt
inlightofalonglineofcaselawtotheeffectthatwherethefirsttwocriteriafor
passingoffareestablished,damagesarepresumed
17.Thisisnottobeconfused
withtheactualestablishmentofthequantumofdamages,which,inthiscase,wasto
bedeterminedpost-judgmentonaReference.

16Interestingly,thisjudgmentbytheFCAhasalreadybeenrelieduponbytheFederalCourtina
subsequentandunrelatedcase,88766Canadainc.c.MonteCarloRestaurantLtd.,2007CF1174
(CanLII)atpar.13,aspartofitsreasonstoexpungeatrade-mark,therebyreversingadecision
renderedbytheRegistrarofTrade-Marksins.45expungementproceedings.
17Forinstance,see:TheNosheryLtdv.ThePenthouseMotorInn,(1969)61C.I.P.R.207,Marc-
Aurelev.Ducharme(1976),34C.P.R.(2d)155atp.162,WaltDisneyProductionsc.TripleFive
Corp.[FANTASYLAND],(1992),43C.P.R.(3d)3321,GreystoneCapitalManagementInc.v.
GreystonePropertiesLtd.,1999CanLII5690(BCS.C.),
RagdollProductions(UK)Ltd.v.JaneDoe(T.D.),2002FCT918(CanLII),LawSocietyofBritish
Columbiav.CanadaDomainNameExchangeCorporation,2004BCSC1102(CanLII)andNational
ProcessEquipmentInc.v.Sigurdson,2004ABQB566(CanLII).

6
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