Judgments

A-478-03

2004 FCA 252

Tommy Hilfiger Licensing, Inc., and Tommy Hilfiger Canada Inc. (Appellants)

v.

International Clothiers Inc. (Respondent)

Indexed as: Tommy Hilfiger Licensing, Inc. v. International Clothiers Inc. (F.C.A.)

Federal Court of Appeal, Décary, Létourneau and Nadon JJ.A.--Montréal, March 10; Ottawa, June 30, 2004.

Trade-marks -- Infringement -- Appeal from Federal Court decision dismissing appellants' claim for infringement of Crest Design trade-marks -- Respondent purchasing shirts featuring Crest Design and shorts featuring similar crest, from suppliers, and then selling shirts, shorts although not licensed to do so -- Trial Judge concluding respondent's crest design not used as trade-mark as no evidence intended to use crest design to distinguish wares, thus not infringing appellants' trade-marks -- Trial Judge also concluding use of respondent's crest design as trade-mark would likely cause confusion -- Meaning of words "used . . . for the purpose of distinguishing or so as to distinguish" found in definition of "trade-mark" in Trade-marks Act, s. 2 -- Respondent's marks confusing with appellants' Crest Design, serving purpose of indicating origin of wares, as such used as trade-mark -- Proof of intention of respondent to use mark as trade-mark or for purpose of indicating origin not necessary -- In view of conclusion respondent crest design likely to cause confusion, exclusive use of appellants' Crest Design trade-marks infringed -- Appeal allowed.

This was an appeal from a decision of the Federal Court dismissing the appellants' claim for infringement of their registered Crest Design trade-marks, which were used in association with clothing for men and boys. In November 1994, the respondent, a clothing retailer operating clothing stores, purchased shirts featuring the appellants' Crest Design from a supplier in Pakistan. The shirts were sold through the respondent's stores between February or March and September 1995 even though the respondent was not licensed to sell the appellants' wares or wares associated with the appellants' Crest Design. The appellants commenced legal proceedings in the United States in September 1995, and in the Federal Court of Canada in 1998. After the Canadian legal proceedings were commenced, the respondent purchased from a supplier in California boys' shorts sets featuring a crest similar to that of the appellants' Crest Design. These shorts sets were sold by the respondent through its stores before mid-1998. The Trial Judge concluded that the respondent had not used its crest design as a trade-mark so as to distinguish its wares from those of others, and that intent on the part of the respondent to so use its crest design could not be inferred on the basis only of the purchases. Consequently the appellants' trade-marks had not been infringed. The Trial Judge went on to determine, on the assumption that he was in error, that the use of the respondent's crest design as a trade-mark would likely cause confusion. The appellants challenged the Trial Judge's dismissal of their claim for infringement. The issue raised by the appeal concerned the meaning of the words "used . . . for the purpose of distinguishing or so as to distinguish" found in the definition of the word "trade-mark" in section 2 of the Trade-marks Act.

Held, the appeal should be allowed.

The Trial Judge erred in concluding that the respondent had not used its crest design mark as a trade-mark. He erred in adopting an interpretation of the statute which required proof that the user had intended to use his mark for the purpose of distinguishing his wares from those of others. Learned authors have opined that the words used in section 2 to define "trade-mark" do not lead to the conclusion that a showing of intent is necessary to a finding that a mark has been used as a trade-mark. The user's intention and public recognition are relevant considerations, and one or the other may be sufficient to demonstrate that the mark has been used as a trade-mark. The fact that the mark may have been affixed to the wares for the purpose of ornamentation is not a bar to a finding that the mark was used as a trade-mark. The respondent's crest design served the purpose of indicating origin and, consequently, was used as a trade-mark. The reasons for this conclusion were as follows. The appellants' Crest Design trade-marks had acquired distinctiveness and consequently served to indicate that the appellants were the source or origin of the articles of clothing with which the marks were associated. The respondent's crest design was very similar to that of the appellants', and it was placed in the same position on the breasts of shirts where the Crest Design trade-marks were placed. This led the Trial Judge to conclude that the respondent's marks were confusing in that the consumer would consider that the source of the respondent's wares was the appellants and hence, the respondent's crest "served the purpose of indicating origin". Whether the respondent intended to use its mark for the purpose of indicating origin was irrelevant since, in fact, the design served that purpose. In view of the Trial Judge's conclusion that the respondent's use of its crest design as a trade-mark would likely cause confusion, the appellants succeeded in demonstrating that their exclusive use of the Crest Design trade-marks was infringed.

statutes and regulations judicially

considered

Trade-marks Act, R.S.C., 1985, c. T-13, ss. 2 "trade-mark", "use", 4, 6, 7, 19 (as am. by S.C. 1993, c. 15, s. 60), 20 (as am. by S.C. 1994, c. 47, s. 196).

Trade Marks Act, 1905 (U.K.), 5 Edw. VII, c. 15, s. 3.

cases judicially considered

considered:

Meubles Domani's v. Guccio Gucci S.p.A. (1992), 43 C.P.R. (3d) 372; 160 N.R. 304 (F.C.A.); Nicholson & Sons, Ld.--In the Matter of an Application for the Registration of a Trade Mark by (1931), 48 R.P.C. 227 (Ch.).

authors cited

Fox, H. G. The Canadian Law of Trade Marks and Unfair Competition, 3rd ed. Toronto: Carswell, 1972.

Fox on Canadian Law of Trade-marks and Unfair Competition, 4th ed. Toronto: Carswell, 2002.

APPEAL from a decision of the Federal Court ((2003), 29 C.P.R. (4th) 39; 239 F.T.R. 260) dismissing the appellants' claim for infringement by the respondent of their registered Crest Design trade-marks used in association with clothing for men and boys. Appeal allowed.

appearances:

Glen A. Bloom for appellants.

No one appearing for respondent.

solicitors of record:

Osler, Hoskin & Harcourt LLP, Ottawa, for appellants.

Smart & Biggar, Toronto, for respondent.

The following are the reasons for judgment rendered in English by

[1]Nadon J.A.: This is an appeal from a decision by MacKay J. of the Federal Court in Tommy Hilfiger Licensing, Inc. v. International Clothiers Inc. (2003), 29 C.P.R. (4th) 39, dated September 19, 2003, which allowed, in part, the appellants' statement of claim against the respondent and dismissed the latter's counterclaim.

[2]Specifically, the learned Judge: (a) affirmed the validity of the appellants' Crest Design trade-marks numbers TMA 426,595 registered April 29, 1994 and TMA 430,112, registered July 8, 1994 (the Crest Design trade-marks); (b) affirmed the appellants' copyright in the Crest Design, registration No. 448,012, registered November 29, 1995; (c) allowed the appellants' claim for infringement of copyright with respect to the respondent's sales of boys' shorts sets in 1998; (d) allowed the appellants' claim for passing off with respect to the respondent's sales of shirts in 1995 and boys' shorts sets in 1998; and (e) dismissed the appellants' claim for infringement of their registered Crest Design trade-marks.

[3]In this appeal, the appellants challenge only the dismissal of their claim for infringement of the Crest Design trade-marks. The issue raised by the appeal concerns the meaning of the words "used . . . for the purpose of distinguishing or so as to distinguish" found in the definition of the word "trade-mark" in section 2 of the Trade-marks Act, R.S.C., 1985, c. T-13 (the Act). More particularly, we are called upon to decide whether the respondent used its crest design mark as a trade-mark so as to attract, pursuant to section 20 [as am. by S.C. 1994, c. 47, s. 196] of the Act, a conclusion of infringement.

The Relevant Legislation

[4]Sections 2, 4, 6, 7, 19 [as am. by S.C. 1993, c. 15, s. 60] and 20 of the Act are relevant to this appeal and I hereby reproduce them:

2. . . .

"trade-mark" means

(a) a mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others,

. . .

"use", in relation to a trade-mark, means any use that by section 4 is deemed to be a use in association with wares or services;

. . .

4. (1) A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.

(2) A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.

(3) A trade-mark that is marked in Canada on wares or on the packages in which they are contained is, when the wares are exported from Canada, deemed to be used in Canada in association with those wares.

. . .

6. (1) For the purposes of this Act, a trade-mark or trade-name is confusing with another trade-mark or trade-name if the use of the first mentioned trade-mark or trade-name would cause confusion with the last mentioned trade-mark or trade-name in the manner and circumstances described in this section.

(2) The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.

(3) The use of a trade-mark causes confusion with a trade-name if the use of both the trade-mark and trade-name in the same area would be likely to lead to the inference that the wares or services associated with the trade-mark and those associated with the business carried on under the trade-name are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.

(4) The use of a trade-name causes confusion with a trade-mark if the use of both the trade-name and trade-mark in the same area would be likely to lead to the inference that the wares or services associated with the business carried on under the trade-name and those associated with the trade-mark are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.

(5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including

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

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

(c) the nature of the wares, services or business;

(d) the nature of the trade; and

(e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them.

7. No person shall

(a) make a false or misleading statement tending to discredit the business, wares or services of a competitor;

(b) direct public attention to his wares, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his wares, services or business and the wares, services or business of another;

(c) pass off other wares or services as and for those ordered or requested;

(d) make use, in association with wares or services, of any description that is false in a material respect and likely to mislead the public as to

(i) the character, quality, quantity or composition,

(ii) the geographical origin, or

(iii) the mode of the manufacture, production or performance

of the wares or services; or

(e) do any other act or adopt any other business practice contrary to honest industrial or commercial usage in Canada

. . .

19. Subject to sections 21, 32 and 67, the registration of a trade-mark in respect of any wares or services, unless shown to be invalid, gives to the owner of the trade-mark the exclusive right to the use throughout Canada of the trade-mark in respect of those wares or services.

20. (1) The right of the owner of a registered trade-mark to its exclusive use shall be deemed to be infringed by a person not entitled to its use under this Act who sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name, but no registration of a trade-mark prevents a person from making

(a) any bona fide use of his personal name as a trade-name, or

(b) any bona fide use, other than as a trade-mark,

(i) of the geographical name of his place of business, or

(ii) of any accurate description of the character or quality of his wares or services,

in such a manner as is not likely to have the effect of depreciating the value of the goodwill attaching to the trade-mark.

(2) No registration of a trade-mark prevents a person from making any use of any of the indications mentioned in subsection 11.18(3) in association with a wine or any of the indications mentioned in subsection 11.18(4) in association with a spirit. [Emphasis added.]

Background

[5]The facts are clearly and thoroughly set out by MacKay J. in his reasons. I will therefore limit my review thereof to those facts necessary to make these reasons intelligible.

[6]The appellant Tommy Hilfiger Licensing, Inc. (THLI) owns all of the intellectual property rights at issue. The other appellant, Tommy Hilfiger Canada Inc. (THC), under license from THLI, distributes and sells articles of clothing in association with THLI's trade-marks, including the Crest Design trade-marks for use in association with clothing for men and boys, namely shirts, sweaters, sport coats, pants, shorts, sport jackets, parkas, overcoats and turtlenecks (TMA 426,595) and for use in association with hats, caps, blazers, bathing suits, sweatshirts and socks (TMA 430,112).

[7]In January 1990, THC began selling articles of clothing, including shirts, featuring the appellants' Crest Design, for delivery to retail customers in Canada. The appellants effected some of the sales through their own stores, but primarily through major department stores or other retailers who met their standards in quality, price and presentation. Many of the stores selling the appellants' garments also used special fixtures or signs arranged with or by the appellants, featuring the Crest Design trade-marks.

[8]During the period 1990 to 1993, approximately 50% of THC's articles of clothing featured the Crest Design trade-marks. For the periods 1994 to 1996 and 1997 to 2000, approximately 35% and 20% of THC's clothing featured the Crest Design trade-marks.

[9]The appellants' Crest Design trade-marks are depicted as follows:

[10]The respondent is a clothing retailer operating retail clothing stores under the trade-name "International Clothiers" and various other names and is the owner of the trade-mark "Garage U.S.A.". It is not licensed to sell the appellants' wares or wares associated with the appellants' trade-marks.

[11]The clothing sold by the respondent through its retail stores is trendy, up-to-date, fashionable clothing, which the respondent purchases from manufacturers who supply the clothing at the respondent's direction. Further, the respondent purchases stock lots of clothing, i.e. lots available whenever manufacturers' arrangements for sale to third parties have not materialized.

[12]I should point out here, as the Trial Judge does in paragraph 21 of his reasons, that THLI found out in early 1994 that shirts, currently under manufacture in Pakistan, featured the appellants' Crest Design and bore price tickets for Wal-Mart. As a result of this information, THLI and Tommy Hilfiger U.S.A., Inc. commenced legal proceedings in the United States against Wal-Mart, seeking and obtaining, inter alia, a preliminary injunction restraining the sale of the Wal-Mart shirts. Prior to trial, the parties arrived at a confidential settlement and a permanent injunction was issued, on consent, by the Federal Court for the Southern District of New York against further sales of the shirts by Wal-Mart.

[13]In November 1994, the respondent purchased the shirts originally destined for Wal-Mart. The shirts bore a label marked "Ash Creek", known as a Wal-Mart label to Ms. Claire Oziel, an employee of the respondent, whose duties included that of purchasing the shirts. The respondent made arrangements for the "Ash Creek" labels to be cut out and for labels and hang tags bearing its trade-mark "Garage U.S.A." to be affixed to the shirts. The shirts were received by the respondent early in 1995 and were sold through its International Clothiers stores between February or March and September 1995.

[14]In April 1995, THLI's U.S. attorneys sent the respondent a cease-and-desist letter, alleging that the shirts imported from Pakistan infringed THLI's trade-mark rights and demanding that the respondent immediately stop selling the shirts. Counsel for the respondent replied, inter alia, that the shirts had been innocently purchased, that no other shirts bearing the Crest Design trade-marks would be reordered, and that any possibility of confusion had been avoided by the prominent display of the trade-mark "Garage U.S.A.".

[15]In June 1995, a second cease-and-desist letter was sent to the respondent, who replied that the remaining inventory was de minimus and that it would be shortly depleted. In September 1995, the appellants filed their statement of claim.

[16]In 1998, after the appellants had commenced their legal proceedings in the Federal Court of Canada, the respondent purchased from a supplier located in the state of California boys' shorts sets featuring a crest similar to that of the appellants' Crest Design trade-marks. These shorts sets were sold by the respondent through its retail stores before mid-1998.

[17]The crest design marks appearing on the respondent's shirts and boys' shorts sets are as follows:

(Shirts)          (Boys' shorts sets)

The Trial Division

[18]I now turn to the subject-matter of this appeal, i.e. the findings made by MacKay J. in respect of the appellants' claim for infringement of the trade-marks and the conclusion which he reached as a result of these findings. Prior to his determination of the appellants' claim for infringement, the Trial Judge dealt with the respondent's defence and counterclaim to the effect that the appellants' Crest Design trade-marks had not been validly registered because they had not been used to distinguish the appellants' wares from those of others.

[19]The Trial Judge had no difficulty concluding that the appellants' trade-marks had acquired distinctiveness through continual and extensive use. Hence, at paragraph 33 of his reasons, he dismissed the respondent's counterclaim in the following terms:

Thus, I am not persuaded that the plaintiffs' Crest Design trade-marks were invalidly registered or had lost distinctiveness when the validity of their registration was questioned by the defence and counterclaim of INC. [International Clothiers Inc.]. In the result, that counterclaim is to be dismissed.

[20]The Trial Judge then turned his attention to the appellants' claim for infringement. Firstly, he opined that before a finding of infringement could be made against the respondent, pursuant to sections 19 and 20 of the Act, it had to be shown that the respondent had used its crest as a trade-mark, i.e. "for the purpose of distinguishing or so as to distinguish" its wares from those of others.

[21]The Trial Judge then found that there was no evidence to the effect that the respondent had used its crest design as a trade-mark so as to distinguish its wares from those of others. Specifically, he found that other than the fact that the shirts purchased for sale in November 1994 and the boys' shorts sets purchased in 1998 featured a crest design similar to that of the appellants' Crest Design trade-marks, there was no evidence supporting the view that the respondent had used its mark as a trade-mark. In his view, intent on the part of the respondent to so use its crest design could not be inferred on the basis only of the purchases.

[22]The fact that the respondent had no involvement in the creation or the design of the men's shirts or of the crest featured on these shirts, and the fact that the respondent had arranged for the supplier of the shirts to have labels and hang tags marked with its trade-mark "Garage U.S.A.", in lieu of the Wal-Mart label "Ash Creek", were found to be relevant considerations by the Trial Judge.

[23]All of this led the Trial Judge to conclude that the crests featured on the shirts and boys' shorts sets were not included on the garments and were not used for sale "for the purpose of distinguishing them from the wares of others" (paragraph 40 of his reasons). As a result, he concluded that the respondent's crest design had not been used as a trade-mark. His findings and conclusions are clearly set out at paragraphs 36-40 of his reasons, where he states:

The defendant further urges that it did not infringe the plaintiffs' interests under ss. 19 or 20 because it did not use its crest as a trade-mark; rather, the crest was mere ornamentation on INC's wares. This was not a use, the defendant says, as defined in the Act, by ss. 2 and 4, that is, the crest was not on its wares as a trade-mark, it was not intended to distinguish the defendant's wares from those of others. Use of the crest as a trade-mark by INC must be established for there to be infringement under both ss. 19 and 20 (see Cie Générale des Établissements Michelin-Michelin & Cie v. C.A.W.-Canada (1996), 71 C.P.R. (3d) 348 (F.C.T.D.), at pp. 357-362 per Teitelbaum J.).

Section 20 of the Act provides that infringement of a registered trade-mark shall be deemed to occur where "a person not entitled to its use . . . sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name" (with certain exceptions not here applicable). For that section to apply the defendant INC must have used its crest, said to be confusing with the registered mark, as a trade-mark, that is, used it as a mark for the purpose of distinguishing or so as to distinguish INC's wares from those sold . . . by others" (the Act, s. 2 so defines a trade-mark).

In my opinion there is no evidence that INC used its crest design as a trade-mark, to distinguish its wares from those of others. Any conclusion that they intended the design to be a trade-mark can only be inferred from the facts that both the shirts purchased for sale in 1995 and the short sets purchased in 1998 had a crest design similar to that used by the plaintiffs on generally similar articles of men's shirts and boys' short sets. That inference is not supported by other considerations.

By the Amended Agreed Statement of Facts INC was not involved in the creation or design of the men's shirts or of the embroidered crest, and it arranged for the supplier to have labels and hang tags marked with INC's own trade-mark GARAGE U.S.A. applied to the shirts after the trade-name owned by Wal-Mart was removed. No marks, other than the crest, comparable to other marks of the plaintiffs' were used by the defendant. There is no evidence that any other wares sold by INC, apart from the two lots, of shirts and short sets, had embroidered or fixed upon them the Crest Design of the plaintiffs or a crest design that might be considered to be confusing with that used by the plaintiffs.

I conclude that the crests appearing on the shirts and short sets here in issue were not included on those wares and were not used in sale of those wares by INC for the purpose of distinguishing them from the wares of others. The marks were not used by the defendant as trade-marks. [Emphasis added.]

[24]Consequently, since the respondent had not used its crest design as a trade-mark, MacKay J. concluded that the appellants' trade-marks had not been infringed. Notwithstanding that conclusion, he went on to determine, on the assumption that he was in error in respect thereto and hence that the respondent had used its crest design as a trade-mark, whether the use of the crest design mark on the shirts and the boys' shorts sets by the respondent would lead to confusion with the appellants' trade-marks.

[25]After a careful review of all of the surrounding circumstances, including those set out in paragraph (a) to (e) of subsection 6(5) of the Act, the Trial Judge made a number of findings that led him to conclude that the use of the respondent's crest design as a trade-mark would likely cause confusion, namely:

1. By November 1994, when the respondent purchased the Wal-Mart shirts, the appellants' Crest Design trade-marks had acquired distinctiveness through continuous use in the marketplace for at least 10 years.

2. The crest design featured on the shirts and on the boys' shorts sets purchased for sale by the respondent was similar to that of the appellants' Crest Design trade-marks, differing only in minor details.

3. The nature of the wares associated with the crest designs of both the appellants and the respondent were generally similar, and the parties were engaged in a single trade, i.e. the sale of men's and boys' clothing.

4. A consumer in the marketplace, aware of the appellants' trade-marks, but remembering them with less than precision, would find the two marks confusing in that he would initially believe that the wares were from the same source or supplier, i.e. the appellants.

[26]At paragraph 45 of his reasons, he formulates his conclusion in the following terms:

I repeat my conclusion that in light of all the circumstances, if the defendant's use of its crest design was as a trade-mark in relation to the shirts and short sets, that use would have created the likelihood of confusion in the mind of the consumer, who was aware of the plaintiffs' Crest Design trade-mark but remembered it imprecisely. In my opinion that consumer would, at least initially, consider that the wares of the defendant came from the same source as those of the plaintiffs. [Emphasis added.]

[27]The Trial Judge also concluded that the appellants had succeeded in demonstrating that the respondent was in breach of paragraph 7(b) of the Act, i.e. that the respondent had directed public attention to its wares, services or business, in such a way as to cause or be likely to cause confusion in Canada in 1996 and 1998, between its wares, services or business and those of the appellants. In reaching that conclusion, the Trial Judge, at paragraph 51 of his reasons, made the following remarks:

Further, in my opinion, the defendant, by a crest design generally similar to the Crest Design of the plaintiffs on polo shirts acquired and sold in 1995, and similar to the plaintiffs' registered Crest Design trade-mark on short sets acquired and sold in 1998, was likely to cause confusion in the mind of the consumer in the marketplace who was aware of the plaintiffs' Crest Design trade-mark but remembered it imprecisely. That opinion, I reach for the reasons set out earlier in considering the likelihood of confusion in relation to alleged infringement under s. 20.

[28]As appears clearly from the above passage, the Trial Judge was of the view that the crest appearing on the respondent's shirts and boys' shorts sets would likely cause confusion in the mind of the consumer.

[29]I must point out that the respondent did not participate in this appeal and, hence, offered no contestation. Thus, the Trial Judge's conclusion regarding the likelihood of confusion has not been challenged.

The Appellants' Submission

[30]The appellants submit that the Trial Judge erred in concluding that the respondent did not use its Crest Design mark on its shirts and boys' shorts sets as a trade-mark. They say that he erred in the following way:

(1) in finding that the respondent did not infringe their trade-marks because it did not intend to use its crest design mark as a trade-mark, i.e. for the purpose of distinguishing its wares from those of others;

(2) in finding that the respondent's crest design mark was not used in the sale of shirts and boys' shorts sets for the purpose of distinguishing them from the wares of others.

[31]The thrust of the appellants' contention is set out at paragraphs 28-30 of their memorandum of fact and law:

28. The words "for the purpose of distinguishing" are not to be used synonymously with the expression "with the intention". Even if a mark is used for an aesthetic or decorative purpose and the mark becomes recognized as indicating origin, the mark has been used for the purpose of distinguishing. . . .

29. In determining whether a mark is used as a "trade-mark", the message conveyed to the public by the use of a mark is more important than the apparent intent of the user. A court determines the message conveyed to the public from the context in which the mark is used. . . .

30. For a mark to be used "so as to distinguish" the user's wares from those of others, all that is required is that the mark actually distinguish the user's wares or serve so as to denote the origin of the wares, regardless of the user's intent.

Analysis

[32]For the reasons that follow, I would allow this appeal. In my opinion, the Trial Judge erred in concluding that the respondent had not used its crest design mark as a trade-mark.

[33]Relying on the definition of the word "trade-mark" found in section 2 of the Act, and on sections 19 and 20, the appellants claim that the respondent infringed their trade-marks. In section 2 of the Act, the word "trade-mark" is defined as a mark used by a person "for the purpose of distinguishing or so as to distinguish" the wares sold by that person from those sold by others. Section 19 confers upon the owner of a trade-mark the exclusive right to its use in Canada in relation to the wares in respect of which the trade-mark has been registered. As to section 20, it provides that the owner's right to the exclusive use of his trade-mark will be deemed to have been infringed when a person, not entitled to its use, sells, distributes or advertises wares in association with a confusing trade-mark.

[34]The only issue before us in this appeal is whether the respondent used its crest design "for the purpose of distinguishing" its shirts and boys' shorts sets "or so as to distinguish" them from those of others. In my view, the answer to that question must be an affirmative one.

[35]In Meubles Domani's v. Guccio Gucci S.p.A. (1992), 43 C.P.R. (3d) 372 (F.C.A.), at page 379, this Court endorsed the point of view found in Fox on The Canadian Law of Trade Marks and Unfair Competition, 3rd ed. Toronto: Carswell, 1972, at page 22, that in determining whether a mark has been used as a trade-mark, the user's intention and public recognition are relevant considerations, and that one or the other may be sufficient to demonstrate that the mark has been used as a trade-mark.

[36]The learned authors of Fox on Canadian Law of Trade-marks and Unfair Competition, 4th ed., Toronto: Carswell, 2002, at pages 3-12, 3-13 and 3-14, express that point of view in the following terms:

(ii)     "For the Purpose of Distinguishing"

The words "for the purpose" in the s. 2 definition of "trade-mark" are not to be read as necessarily synonymous under all conditions with the expression "with the intention". This was pointed out by Romer L.J. in Nicholson's Application where he observed that if a manufacturer uses a mark in association with his goods for merely aesthetic or decorative motives, or for warehouse purposes, and the mark comes to be recognized by the public as indicating origin, then the mark has been used in such a way as to have served the purpose of indicating origin and comes within the definition.

It will be seen at a later stage that, although different results will flow from the choice of words used in the new definition than from those used in the earlier legislation, the function of a trade-mark, in the sense of its purpose, remains the same, namely, that of distinguishing certain things for which the trade-mark owner is responsible from those for which he is not responsible. The mode of action by which a trade-mark may fulfil that purpose was, however, changed by the new definition of the 1953 Act so that a trade-mark need now be examined as to its innate quality only at, and subsequent to, the opposition stage. At the application stage its status as a trade-mark depends only upon the purpose or the result of its use as a question of fact, or in other words, upon intention or recognition.

(iii)     "So as to Distinguish"

The nature of the use sufficient to fulfill the definition of a trade-mark is not to be considered in any restrictive sense. Both the intention of the user and recognition by the public are relevant facts and either may be sufficient to show that there has been trade-mark use: it is not necessary that there should be both, but at least one must be present. This is inherent in the use of the disjunctive in the definition of a trade-mark, that it is used "for the purpose of distinguishing or so as to distinguish". Nor does the use of the words "for the purpose" imply that any deliberate resolution to that effect on the part of the user of the mark is contemplated. It is enough if in practice the mark has been used as to denote the origin of the goods. It is not essential to prove in addition that the market has accepted it as a distinguishing mark, it is the adoption by a trader for the purpose of distinguishing his/her goods that is the governing factor.

The intention of the user, that is, the purpose of use, is, under the Trade-marks Act, sufficient to cause a word or other mark to become a trade-mark. This is inherent in the first part of the definition contained in s. 2. But such intention is not, of itself, sufficient to make such a trade-mark a registrable trade-mark or one that is subject to protection. The intention of the owner to use a mark as a trade-mark will be registrable only if it meets the tests provided in the various sections of the statute. If it does not, then one turns to the second part of the definition to ascertain whether the mark has been used "so as to distinguish" its owner's wares or services from those of other traders. That is to say, if the trade-mark is denied registrability by virtue of its character, a factual inquiry becomes necessary in order to ascertain whether the trade-mark actually distinguishes or, in other words, to determine whether it has acquired distinctiveness in fact. This is a necessary inquiry not only for registrability, but also for validity under the statute and, in addition, for protectability of an unregistered mark at common law. [Footnotes omitted; emphasis added.]

[37]In addition to their view that intention on the part of the user and public recognition are to be considered, the learned authors of the 4th edition of Foxa, also opine that the words used in section 2 to define "trade-mark" do not lead to the conclusion that a showing of intent is necessary to a finding that a mark has been used as a trade-mark. For that proposition, the authors rely on the words of Romer L.J. in Nicholson & Sons, Ld.--In the Matter of an Application for the Registration of a Trade Mark by (1931), 48 R.P.C. 227 (Ch.), at page 260, where Lord Justice Romer, in interpreting section 3 of the English Trade Marks Act, 1905 [(U.K.), 5 Edw. VII, c. 15] makes the following remarks:

The next contention on the part of the Respondents is as to the meaning of the words "in use as a trade-mark." They say that in order to constitute user of a trade mark two things must exist concurrently, namely, (1) the intention of the proprietor of the mark to indicate by its use the origin of the goods upon or in connection with which it is used; (2) recognition of the mark as indicating origin on the part of that section of the public with whom the proprietor deals. Now I do not doubt that for the purpose of ascertaining the nature of the user of a mark one may legitimately take into consideration both the intention of the owner of the mark and the effect that the user has had upon the public, and the absence of both intention and public recognition would render it difficult, if not impossible, to treat the user as being user as a trade mark. But I can see no reason whatever for regarding both intention and recognition by the public as essential conditions of such a user. If a trader uses a mark upon or in connection with his goods with the intention of indicating their origin, surely he is using it as a trade mark from the moment of the first user, which will probably be many months before the public has come to recognise the mark as indicating origin. If public recognition be a requisite of user as a trade mark, the proprietor must necessarily remain in ignorance of whether he is or is not using a trade mark until by some means or another he has ascertained the views of the public upon the matter. How he is to do this has not been explained to me and I do not know. But it is quite clear that he can never ascertain when the public first regarded the mark as indicating origin, and must ever be unable to answer the question, "When did you first use the mark as a trade mark?". In my opinion, a trader is at any rate using a mark as a trade mark when he first uses it upon or in connection with his goods with the intention of indicating origin, assuming of course that it is a mark capable of so doing. In other words, intention without recognition is enough. But is public recognition without intention enough? Supposing a manufacturer, for merely aesthetic or decorative motives, or merely warehouse purposes, uses a mark on or in connection with his goods, and such mark comes to be recognised by the public as indicating origin, has the mark been used as a trade mark? I can see no reason for thinking that it has not. It is said that in such a case the mark does not come within the definition of a trade mark in Section 3 of the Trade Marks Act which, so far as material, is in these words: "A mark used upon or in connection with goods for the purpose of indicating that they are the goods of the proprietor of such trade mark by virtue of manufacture." But I do not read the words "for the purpose" as necessarily meaning "with the intention." Where, as in the case I have supposed, the mark has been used in such a way as to have served the purpose of indicating origin, it seems to me to come within the definition. [Emphasis added.]

[38]In view of the Trial Judge's finding that the respondent did not intend to use its crest design as a trade-mark, the question then boils down to whether the respondent's mark served the purpose of indicating origin. As Romer L.J. clearly explains in his reasons in Nicholson's Application, the fact that the mark may have been affixed to the wares for the purpose of ornamentation is not a bar to a finding that the mark was used as a trade-mark.

[39]The Trial Judge concluded that there was no evidence to support the appellants' contention that the respondent had used its crest design as a trade-mark. After noting in paragraph 36 of his reasons that the respondent had taken the position that its crest was simply ornamentation on its wares, the Trial Judge, in paragraph 39 of his reasons, explained why he was satisfied that the respondent had not intended to use its crest design as a trade-mark. For ease of reference, I again reproduce paragraph 39:

By the Amended Agreed Statement of Facts INC was not involved in the creation or design of the men's shirts or of the embroidered crest, and it arranged for the supplier to have labels and hang tags marked with INC's own trade-mark GARAGE U.S.A. applied to the shirts after the trade-name owned by Wal-Mart was removed. No marks, other than the crest, comparable to other marks of the plaintiffs' were used by the defendant. There is no evidence that any other wares sold by INC, apart from the two lots, of shirts and short sets, had embroidered or fixed upon them the Crest Design of the plaintiffs or a crest design that might be considered to be confusing with that used by the plaintiffs.

[40]In my opinion, the Trial Judge erred in adopting an interpretation of the statute which required proof that the user had intended to use his mark for the purpose of distinguishing his wares from those of others. With the greatest of respect, it appears to me that the Trial Judge clearly failed to address what, in my view, was the crucial question, i.e. whether, irrespective of its intentions, the respondent had used its crest so as to denote the origin of the shirts and boys' shorts sets, or used the crest in such a way as to have served the purpose of indicating origin. In my view, there cannot be much doubt that the respondent's crest design did serve the purpose of indicating origin and, consequently, was used as a trade-mark. My reasons for this conclusion are the following.

[41]One must necessarily begin with the fact that, as the Trial Judge found, the appellants' Crest Design trade-marks had by November 1994 and early 1995 acquired distinctiveness by reason of their continuous use in the marketplace for at least 10 years. Consequently, the trade-marks served to indicate to consumers that the appellants were the source or origin of the articles of clothing with which the marks were associated.

[42]As the Trial Judge also found, the crest design featured on the respondent's shirts and boys' shorts sets, save for minor details, was very similar to the appellants' Crest Design trade-marks. Further, the respondent's crest design, as affixed to its shirts, was placed in the same position on the breast of the shirts where the Crest Design trade-marks were placed on the appellants' shirts. In that respect, there was evidence before the Trial Judge that the respondent was aware of the common practice of affixing a logo on the breast of a shirt or a sweater, independently of a brand-name, for the purpose of indicating the source of a garment.

[43]As I indicated earlier, these facts led the Trial Judge to conclude that the consumer would find the appellants' and the respondent's marks confusing in that he would consider that the source of the respondent's wares was the appellants and hence, in the words of Romer L.J., the respondent's crest "served the purpose of indicating origin", i.e. served the purpose of indicating that the appellants were the source of the shirts and the boys' shorts sets with which the respondent's crest design was associated.

[44]Therefore, the Trial Judge's finding of confusion constitutes a finding that the respondent's crest design would be recognized by the public as an indication that the garments associated with the design were those of the appellants. This is so obviously the case that the Trial Judge easily came to the conclusion that the respondent was in breach of paragraph 7(b) of the Act, i.e. that the respondent had passed off its wares as those of the appellants in that it had directed public attention to its wares by the use of its crest design, in such a way as to likely cause confusion in Canada between its wares and those of the appellants. Consequently, in the circumstances of this case, whether the respondent intended to use its mark for the purpose of indicating origin is irrelevant, since, in fact, the design served that purpose.

[45]In view of the Trial Judge's conclusion that the respondent's use of its crest design as a trade-mark would likely cause confusion, there can be no question that the appellants have succeeded in demonstrating that their exclusive use of the Crest Design trade-marks was infringed.

Disposition

[46]As a result, I would allow this appeal, I would set aside the order of MacKay J. dated September 19, 2003 to the extent that he dismissed the appellants' claim for infringement of their Crest Design trade-marks and, rendering the judgment which the learned Judge ought to have rendered, I would declare that the respondent infringed the appellants' Crest Design trade-marks.

[47]With respect to costs, we were advised prior to the hearing that in view of the respondent's decision not to offer any contestation to the appellants' appeal, the appellants would not be seeking costs. Hence, I would make no order as to costs.

Décary J.A.: I agree.

Létourneau J.A.: I agree.