Trade-Mark and Corporate Indicia Used by an Ex-Franchisee

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TRADE-MARKANDCORPORATEINDICIAUSEDBYANEX-FRANCHISEE

By
CatherineBergeron*
LEGERROBICRICHARD
,L.L.P.
Lawyers,PatentandTrademarkAgents
CentreCDPCapital
1001Square-Victoria-BlocE–8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.(514)9876242-Fax(514)8457874
info@robic.com-www.robic.ca

140GréberHoldingInc.v.DistributionStéréoPlusInc.2005QCCA1030(Court
ofAppeal,ProvinceofQuebec)

1.Thefacts

TheRespondent,DistributionStéréoPlusInc.(hereinafter“StéréoPlus”),
operatesanetworkoffranchisedelectronicappliancesdealers.Tothisend,
StéréoPlusdesignedanddevelopedaparticularinteriorlayoutofthe
franchisedstoresconsistingofdistinctivecolours,furniture,carpet,etc.The
Appellant,140GréberHoldingInc.(hereinafter“Gréber”),andStéréoPlus
signedafranchisingcontractinNovember2001;Gréberadoptedforitsstore
saidparticularinteriorlayoutaccordingtoStéréoPlus’instructions.

InJune2002,StéréoPluscancelledthefranchisingcontractwithGréber;said
cancellationhaseventuallybeenconfirmedbytheSuperiorCourt.Amongst
others,GréberwascompelledbytheCourttomodifytheinteriorandexterior
appearanceofitsstoreinordertoavoidanyconfusion,error,associationor
relationwithStéréoPlus.SinceGréberdidnotfullycomplywiththeCourt’s
Order,StéréoPlusfiledamotionbeforetheSuperiorCourtinordertoforce
Grébertoconformtoitsobligations.TheSuperiorCourtgrantedthe
interlocutoryinjunctionandorderedGrébertochangethecolors,carpet
andfurnitureofitsstoreandtoceaseusinganysignconfusingthemark
STÉRÉOPLUSoranysigncontainingthewords“Plus”and“Électronique”.
Gréberappealedfromthatdecision.

2.TheCourtofAppeal’sdecision

©CIPS,2006.*Lawyer,CatherineBergeronisamemberofLEGERROBICRICHARD,L.L.P.,amultidisciplinary
firmoflawyers,andpatentandtrademarkagents.Publication293.029.

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TheCourtofAppealstatesthattheinterlocutoryinjunctiononlyhasa
provisorycharacterandtheopeningrulesaretobestrictlyinterpretedgiven
thatitconstitutesanexceptionalmeasureintendedtomaintainastatuquo
untilthedecisiononthemerits.TheTrialJudgebenefitsfromalarge
discretionwhichmustbeobservedbytheCourtofAppealunlessitisofthe
viewthatsaiddiscretionhasbeenmisused.

WithrespecttothegeneralappearanceofGréber’sstore,theSuperiorCourt
didnotcommitanymistakebyfindingthattheminorchangesmadeby
Gréberdidnotrespectitsobligationtomodifytheinteriorappearanceofits
storeinordertoavoidanyconfusion,error,associationorrelationwithStéréo
Plus.

Regardingthetradenameandthelikelihoodofconfusion,theCourtof
AppealisoftheviewthatStéréoPlushasshownaprimafacierightwhichis
not,however,totallyclear.Inthesecircumstances,theCourtofAppealmust
considertheothertwoelementsoftheinjunction:theirreparableharmand
thebalanceofinconveniences.Inthisrespect,theCourtofAppealisofthe
viewthatStéréoPlusdidnotmeetitsburdenofproof.

Indeed,intheCourtofAppeal’sopinion,itisquestionabletopreventGréber
fromusingthewords“Électronique”and“Plus”initsnamegiventhatthe
formerdescribesthenatureofitsbusinessandthelattersimplysuggests
excellence.Thewords“Électronique”and“Plus”inGréber’snamedonot
leadtoalikelihoodofconfusionwithStéréoPlus’business.Therefore,contrary
tothedistinctiveelementscomposingitsparticularinteriorlayout(suchasthe
colors,carpetandfurniture),StéréoPlusdidnotshowanirreparableharm
withrespecttoGréber’stradename.

Consequently,theCourtofAppealpartiallygrantedtheappealand
orderedGrébertocomplywiththefollowingobligations:1)tochangethe
carpetandtheSTÉRÉOPLUSsignbehindthecashregisterand2)nottousea
nameoratrade-markcreatingconfusionwithStéréoPlus’trade-marks.

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