Judgments

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T-203-75
Benjamin Distribution Ltd., Montreal News Deal ers Supply Company Ltd., American Distributors Service Company Ltd. (Plaintiffs)
v.
Les Distributions Eclair Ltée (Defendant)
Trial Division, Walsh J.—Montreal, February 24, Ottawa, February 27, 1975.
Jurisdiction—Motion to strike statement of claim—Wheth- er Court has jurisdiction—Plaintiffs, distributors of maga- zines—Allege defendant disseminating brochure portraying itself as exclusive distributor of said magazines—Whether false and misleading statements constituting unfair trade prac- tice—Plaintiffs seeking injunction—Whether type of passing off contemplated by Trade Marks Act—Trade Marks Act, R.S.C. 1970, c. T-10, s. 7(a), (b) and (e) —Federal Court Act, s. 20.
Defendant moved to strike plaintiffs' statement of claim, maintaining that the Court lacked jurisdiction. Plaintiffs are magazine distributors to retail outlets and also provide instan taneous sales reports to the publishers. Plaintiffs allege that defendant has been distributing a brochure portraying itself as exclusive distributor of said magazines, and stating that it can supply sales reports faster than anyone else. Plaintiffs contend that these statements constitute unfair competition under the Trade Marks Act, and invoke that Act, common law, and equity for an injunction against the distributor of the brochure.
Held, granting the motion to strike the statement of claim, the fact that plaintiffs may have a right of action does not necessarily give the Court jurisdiction if the proceeding arises from a claim under common law for unfair competition, or business practice contrary to honest industrial or commercial usage in Canada unless such claims are connected with the Trade Marks Act. This would constitute, at most, an exag gerated advertising claim. There is no suggestion that there is any distinguishing mark which sets plaintiffs' services apart from those performed by others within the meaning of section 7(a) of the Act (" ... tending to discredit the business, wares or services of a competitor."). The purpose of the Trade Marks Act is to prevent only unfair competition; when two parties advertise the same services, such confusion as may result is not the type of passing off contemplated by section 7(b). And, while section 7(e) can stand alone, plaintiffs were unable to find any jurisprudence granting an injunction with relation to "services". While section 7 does refer to "services" as well as objects, its aim is the protection of services with which the use of a trade mark is associated. There is nothing in the case to distinguish the services of plaintiffs from those of anyone else.
Therapeutic Research Corporation Limited v. Life Aid
Products Limited [1968] 2 Ex.C.R. 605, distinguished.
MOTION to strike statement of claim. COUNSEL:
L. Sculman for plaintiffs.
J. Greenstein for defendant.
SOLICITORS:
Tinkoff, Seal, Shaposnik & Moscowitz, Montreal, for plaintiffs.
Geoffrion & Prud'homme, Montreal, for defendant.
The following are the reasons for judgment rendered in English by
WALSH J.: Defendant moves to strike plaintiffs' statement of claim or subsidiarily to strike there from certain allegations and conclusions which allegedly do not disclose a reasonable cause of action and are frivolous or vexatious and an abuse of the process of the Court and finally with respect to paragraphs 4 and 5 of plaintiffs' statement of claim that if they are not struck, plaintiffs be ordered to furnish particulars with respect to them and that the delay for filing a defence be suspend ed for such delay as the Court may see fit.
Defendant's primary objection to the entire statement of claim is that this Court has no juris diction over the cause of action and if this ground is sustained then there will be no need to decide the merits of the subsidiary conclusions.
For the purposes of the motion to strike, the allegations in the pleading it is sought to strike must be deemed to be true and the Court has to determine whether this being so, they can give rise to the right claimed.
Without reciting the allegations of plaintiffs' statement of claim in detail, it can be stated that it alleges that plaintiffs have, for many years, been engaged in the distribution of magazines and peri odicals in both English and French in the Province of Quebec and have acquired the exclusive rights for the distribution inter alia of Reader's Digest, Maclean's Magazine and Chatelaine in their Eng-
lish versions which they have been distributing for thirty-five years in addition to distributing a maga zine known as Sesame Street with exclusive distri bution rights since September 1970, and also a periodical known as Salut les Copains and many comic books emanating from the United States. It is further alleged that they have furnished the distribution services to the supermarket grocery chain operated by Steinberg's Limited for twenty- five years as well as to three thousand other retail outlets, and that they furnish instantaneous sales reports to the publishers through access to central computing facilities. They allege that defendant has been disseminating throughout Canada and the world an advertising brochure in which it portrays itself as the exclusive distributor of the magazines known as Maclean's Magazine, Chate- laine, Reader's Digest, Sesame Street, and Salut les Copains'. The brochure further refers to the fact that it can supply its clients with sales reports faster than anybody else, that the growth of super markets and shopping centres has altered the buying habits of Quebecers and that defendant was the first to set up points of sales to tap this new market, and that it distributes a number of America's favourite lines of comic books. Plaintiffs complain that they furnish their clients with sales reports with at least the same dispatch as defend ant, that they were distributing the magazines to supermarkets before defendant came into existence and that they are the distributors of seven major comic book lines whereas defendant distributes only one line of American comic books. They contend that these false and misleading statements constitute unfair competition within the provisions of the Trade Marks Act 2 , that they have acquired a reputation for distribution in a reliable and regular manner, and that defendant is guilty of acts calculated to deceive the public and to pass off its distribution services as being sanctioned and authorized by plaintiffs who hold the exclusive rights to distribute the magazines and periodicals in question. They invoke common law, equity and the provisions of section 7(a), (b), (c) and (e) of the Trade Marks Act, seek an injunction restrain ing defendant from the dissemination of the adver-
' It should be pointed out that the advertising brochure produced does not indicate any claim by defendant to being the "exclusive" distributor.
2 R.S.C. 1970, c. T-10.
tising brochure in question, directing public atten tion to its services in a way as to be likely to cause confusion in Canada between its distribution ser vices and those of plaintiffs, doing any acts or adopting any business practice contrary to honest industrial or commercial usage in Canada and likely to injure plaintiffs, as well as an order for delivery up for destruction of all the advertising brochures, for the production of names and addresses of all persons to whom copies of the brochure have been sent, and for damages.
If plaintiffs have the exclusive distribution rights for the magazines in question in the Province of Quebec as they claim, then they may well have a legitimate cause of action against defendant, although one might wonder why they do not choose to bring proceedings against the publishers if they have such exclusive rights since it is evident that defendant expects to encounter no difficulty in having access to these magazines for distribu tion by it, if in fact it is not already distributing same. However, that is not an issue which is before me. The fact that plaintiffs may have a right of action does not necessarily give jurisdiction to this Court if the proceeding arises from a claim under the common law for unfair competition or business practice contrary to honest industrial or commer cial usage in Canada unless such claims arise out of, or are in some way connected with, the Trade Marks Act. Section 20 of the Federal Court Act gives the Trial Division:
... concurrent jurisdiction in all other cases in which a remedy is sought under the authority of any Act of the Parliament of Canada or at law or in equity, respecting any patent of invention, copyright, trade mark or industrial design. [Italics mine.]
Plaintiffs claim that this Court has jurisdiction by virtue of section 7 of the Trade Marks Act. In particular paragraphs (a), (b) and (e) read as follows:
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;
(e) do any other act or adopt any other business practice contrary to honest industrial or commercial usage in Canada.
Attention was particularly directed in argument to the fact that paragraphs (a) and (b) referred to "services" as well as business and wares. In the present case there is no suggestion that defendant is passing off other magazines in substitution for the magazines in question, plaintiffs' grievance arising out of the fact that defendant indicates in its advertising brochure that it can provide the same services as those which plaintiffs have been furnishing for many years and, in fact, even implies that it can supply sales reports faster than anybody else, and that it was the first to tap the market for these publications in supermarkets in Quebec. Without going into the merits of the case, it would appear that this would constitute at most an exaggerated advertising claim such as one finds in advertisements for all sorts of products and could not be interpreted as "tending to discredit the business affairs or services of a competitor" within the meaning of section 7(a) of the Act.
The word "services" is not defined in the Act, but the word "trade mark" is defined as
(a) a mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or services manu factured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others,
(b) a certification mark,
(c) a distinguishing guise, or
(d) a proposed trade mark;
"Certification mark" is itself defined in a manner that indicates without any doubt that it refers to a specific mark which is used with respect to the wares or services of a defined standard so as to distinguish them from wares or services that are not of such a defined standard. Similarly, "distin-
guishing guise" refers to the shaping of wares or their containers or a mode of wrapping which distinguishes the wares or services from those sold or performed by others. There is no suggestion here that there is any distinguishing mark which distinguishes the distribution services performed by plaintiffs from those performed by others. While the services may be very efficiently and competently performed, there is nothing unique about the manner in which they are performed which is being copied by defendant. Anyone can perform similar distribution services provided they can obtain the source of supply of the magazines to be distributed, have the necessary financing, equipment, experience and competency to render the type of services which plaintiffs allegedly render.
The purpose of the Trade Marks Act is not to prevent competition but only unfair competition. When two people advertise that they can perform the same services, this may in one sense of the word cause confusion among potential customers but I do not find it to be the type of confusion or passing off contemplated by section 7(b) of the Trade Marks Act.
If plaintiffs are to bring the matter within the Trade Marks Act they would have to do so by virtue of the rather generalized provisions of sec tion 7(e). Reference was made to the judgment of Noël J., as he then was, in the case of Therapeutic Research Corporation Limited v. Life Aid Prod ucts Limited' which held that section 7(e) of the Trade Marks Act can stand by itself and does not necessarily have to deal with matters ejusdem generis with those covered in paragraphs (a),(b),(c) and (d) of section 7 as had previously been thought following the decision in Eldon Industries Inc. v. Reliable Toy Co. Ltd. 4 . In the Therapeutic Research Corporation Limited case, however, the defendant had used pictures of an object, being an oxygen mask produced by plain
3 [1968] 2 Ex.C.R. 605.
4 28 Fox Pat. C. 163; 31 Fox Pat. C. 186.
tiffs, with the label of the defendant corporation stuck over the label of the plaintiffs. The judgment stated at page 607:
The statements and representations contained in defendant's publicity leaflets (of which, according to counsel, they still have six thousand) are, therefore, clearly deceptive and although such a course of action may not fall under the prohibition contained in subsections (a), (b), (c) or (d) of section 7 of the Trade Marks Act it is, in my view, covered by subsection (e) thereof in that such statements or representations constitute a deceptive practice as representing to the public as the defend ant's device, a device which was produced by somebody else and which also is different from its own device. Such a deliber ate and dishonest practice, in addition to being confusing, deceiving and misleading to the public is also contrary to honest commercial usage in this country.
This judgment therefore dealt with an object and not a service and, in fact, plaintiffs concede that they have been unable to find any jurisprudence in which an injunction has been granted under the provisions of the Trade Marks Act for unfair competition or business practices contrary to honest industrial or commercial usage in Canada with relation to services. Fox, The Canadian Law of Trade Marks and Unfair Competition, 3rd ed., has this to say at page 64:
Under the common law and the earlier statutes only marks used to identify wares were regarded as trade marks; the creation of trade mark rights in marks used to identify services thus constitutes an innovation in Canadian law. Use of a trade mark is now deemed to take place in association with services if it is used or displayed in the performance or advertising of such services. "Use in Canada" of a trade mark in respect of services is not established by mere advertising of the trade mark in Canada coupled with performance of the services elsewhere but requires that the services be performed in Canada and that the trade mark be used or displayed in the performance or advertis ing in Canada of such services.
It would appear therefore that although section 7 of the Act refers to "services" as well as to wares or business, it has in mind the protection of ser vices in connection with which the use of a trade mark is associated. There is no such trade mark in the present case or anything to distinguish plain tiffs' services from those of anyone else. I therefore find that this Court does not have jurisdiction to entertain the proceedings brought by plaintiffs herein.
ORDER
Defendant's motion to strike plaintiffs' state ment of claim is granted, with costs.
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