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The Impact of a Previous Decision of the TMOB in an Action for Statutory Passing Off

A recent decision of the Federal Court deals with a statutory claim for passing off and the effect of a prior decision of the Trademark Opposition Board. Mainstreet properties Corp. v. Canadian Mortgage Capital Corporation 2022 FC 20.


The plaintiff sued several defendants for passing off and related relief. Before the action was brought, the plaintiff successfully opposed an application by one defendant for a trademark similar to the mark in issue in the action. The primary defendant successfully applied for a variant of the mark, which was not opposed. The plaintiff asserted this registration was invalid and should be expunged.

The Plaintiff

The plaintiff is a publicly-traded Canadian residential real estate corporation organized and existing under the laws of Alberta. It was established in 1997. It focuses on the acquisition, refinancing, rental, management and sale of residential properties in Canada. The plaintiff owns and operates properties throughout Western Canada, including Saskatchewan, Alberta and British Columbia. It also operated for a time in Ontario but stopped doing business there.

The plaintiff’s trademarks are shown below:







The Defendants

The Defendants are a group of related companies involved in the real estate industry. In broad terms, they provide non-bank lender services primarily to real estate developers, mortgage brokerage services, mortgage funds management, mortgage servicing and related financing services through real estate investment funds.


The registration in issue relates to mortgage investment services and the provision of mortgage loans in association with the following design:








Each defendant uses the design shown above in conjunction with their specific corporate name in association with the specific service they offer to the public.

The Opposition

The first named defendant applied for the above design by itself without its corporate name. The Hearing Officer considered all the surrounding circumstances, in particular the similarity between the parties’ trademarks, the overlap in the nature of the business of the parties, and that only the plaintiff/opponent filed evidence of the use of its Skyscrapers Design Trademark at the material date. She concluded that the applicant had not discharged its burden of establishing on a balance of probabilities, that the mark was not confusing with the plaintiff’s trademarks.

Shortly after the release of this decision, the defendants applied for the same design but with the words “Atrium Mortgage Investment Corporation” directly below the logo. No opposition was filed, and registration was issued.

The Summary Trial

The Judge accepted the parties’ position; this was a suitable case for summary trial. A summary trial promotes a more efficient and timely adjudication of the issues. He said that the issues were not complex, the evidence was by way of affidavit supported by an extensive documentary record, and the principal affiants for each party were examined and cross-examined. There was sufficient evidence for adjudication of the issues, and although there were conflicts in the evidence, credibility was not a significant factor.

Passing off

The plaintiff was enforcing its rights relating to its unregistered trademarks and claimed that defendants had engaged in passing off contrary to paragraph 7(b) of the Trademarks Act. A threshold requirement is that the plaintiff must establish that it has a valid and enforceable trademark, whether registered or unregistered, at the time the defendant first directed public attention to its own goods and services. Absent use of an unregistered trademark is not enforceable. The Judge was satisfied that the plaintiff had shown use and its marks were valid and enforceable. This requirement arises from constitutional constraints on Federal jurisdiction in relation to trademarks.

To succeed, the plaintiff must establish:

a) Goodwill or reputation attached to the services it supplies, in the mind of the purchasing public, from association with the identifying get up, recognized as distinctive of its services;

b) Confusion: that the defendants have made a misrepresentation to the public (whether intentional or not) resulting in or likely to result in the public concluding that defendant’s services are associated with those of the plaintiff; and

c) Damages: that it has suffered or will suffer damage because of the erroneous belief caused by the Defendants’ misrepresentation regarding the source of the services.

Goodwill

In assessing goodwill or reputation the jurisprudence points to factors such as inherent or acquired distinctiveness, length of use, surveys showing customer awareness, the volume of sales, extent and duration of advertising and marketing, and intentional copying. Applying this approach, the Judge was satisfied that the plaintiff had established sufficient goodwill in association with both of its marks.

Misrepresentation to the Public

The misrepresentation to the public asserted by the plaintiff was the likely confusion with its trademarks. This occurred when the defendants “direct public attention to [their] services or business in such a way as to cause or be likely to cause confusion.”

The Judge applied a standard confusion analysis as required under the Trademarks Act. First, the definition of confusion was considered “The use of a trademark causes confusion with another trademark if the use of both trademarks in the same area would be likely to lead to the inference that the …services associated with those trademarks are…. sold, leased, hired or performed by the same person, whether or not the …services are of the same general class.”

Second, the statutory factors were considered “In determining whether trademarks ….are confusing, the court …. shall have regard to all the surrounding circumstances including

(a) the inherent distinctiveness of the trademarks or trade names and the extent to which they have become known;

(b) the length of time the trademarks or trade names have been in use;

(c) the nature of the ….services or business;

(d) the nature of the trade; and


the degree of resemblance between the trademarks or trade names, including in appearance or sound or in the ideas suggested by them.


Finally, these matters are applied as a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the defendant’s mark, when he or she has no more than an imperfect recollection of the plaintiff’s trademarks and does not give the matter any detailed consideration or scrutiny or examine closely the similarities and differences between the marks.


Unfortunately for the plaintiff, the Judge was not persuaded by their case. Considering the factors together, in the surrounding circumstances, he was not persuaded that the plaintiff had established a likelihood of confusion. The lack of close resemblance between the respective marks, that they operate through somewhat different channels of trade and that their potential customers will spend some time before deciding to rent or invest, and the lack of evidence of confusion despite a lengthy period of co-existence in the marketplace in several major Canadian cities, were important factors.


The decision of the Trademark Opposition Board was not given any weight because it was based on a different record, where the Board was required to apply a different burden of proof. The corporate names used by each defendant all referred to mortgages and did not resemble the plaintiff’s name. There was a lengthy period of co-existence of the businesses, and evidence of confusion was not presented.


Comment

The decision of the Court is well reasoned and correctly applies the principles required to be considered by the caselaw. It is puzzling why the plaintiff did not oppose the defendant's second trademark application.


There was no evidence of what was happening in the marketplace either by way of evidence of confusion or by survey evidence. Such evidence would have been helpful.


If you have questions, please contact me at mckeown@gsnh.com.


John McKeown

Goldman Sloan Nash & Haber LLP

480 University Avenue, Suite 1600

Toronto, Ontario M5G 1V2

Direct Line: (416) 597-3371

Fax: (416) 597-3370


These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.


A version of this article originally appeared in the Lawyer’s Daily published by LexisNexis Canada Inc.

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