Federal Court of Appeal Overturns Federal Court Passing-off Decision for Single-Letter Trade-marks

In an earlier issue of E-tips® ("BMW Achieves Divided Success in Federal Court Over Use of Single-Letter Trade-Marks", Vol 5, No 19, March 28, 2007), we reported that the use of the marks M and M6 for Nissan's Infiniti line of automobiles had been held by the Federal Court of Canada to constitute passing off, contrary to the Trade-marks Act (Act). The Court held that Nissan had created a likelihood of confusion between the sources of the wares by using M and M6, which BMW used as trade-marks in essentially the same trade and business. The Federal Court of Appeal (Appellate Court) has now overturned the decision, holding that the trial judge had erred in law by assessing passing-off without first determining whether the M and M6 marks were trade-marks within the Act. Not being registered trade-marks, a determination should first have been made whether the marks met the requirements of a trade-mark under the statute. Specifically, the Federal Court should have determined whether the trade-marks had been used in association with the wares. Since the M and M6 marks were not marked on BMW's wares or the packages in which they were distributed, the Appellate Court held that the Federal Court should have then assessed whether at the time of transfer of the property in or possession of the wares, the M and M6 marks were so associated with BMW's wares that notice of the association was given to the person to whom the property or possession was transferred. After reviewing the evidence at trial, the Appellate Court ruled that BMW's use of the marks was limited to advertisements and promotional materials for which there was no evidence that the materials were given to purchasers. This type of use does not constitute "use" under the Act as established in Clairol International Corp et al v Thomas Supply & Equipment Co Ltd et al (1968), 55 CPR 176 at 190 (Can Ex Ct) and General Mills Canada Ltd v Procter & Gamble Inc (1985), 6 CPR (3d) 551 (TM Opp Bd). The Appellate Court also held that the trial judge erred when considering the third requirement of passing-off, namely, whether actual or potential damage had been incurred by the trade-mark owner. Prior to the trial, the Federal Court had ordered that the issue of liability be separated from the issues of the extent of damages and accounting of profits. However, the Appellate Court noted that such an order did not relieve the plaintiff from the necessity of proving the existence of damage. Rather, it simply deferred proof of the extent of the damage pending the determination as to liability. For the full text of the reasons for judgment in the Federal Court of Appeal, see: http://decisions.fca-caf.gc.ca/en/2007/2007fca255/2007fca255.html Summary by: Katharine McGinnis