T-2746-86
BMB Compuscience Canada Ltd. (Applicant)
v.
Bramalea Limited (Respondent)
INDEXED AS: BMB COMPUSC!ENCE CANADA LTD. V. BRAMA -
LEA LTD.
Trial Division, Teitelbaum J.—Ottawa, September
9 and October 7, 1988.
Trade marks — Expungement — Trade mark for computer
software used in electronic mail system — Applicant claiming
prior usage — Whether sufficient use if mark only function of
computer network .system Whether mark attached to ware
or service.
Both the applicant and the respondent are in the computer
software business. Both claim rights to the trade mark "NET-
MAIL" as used in association with computer software designed
to operate an electronic mail system. The respondent obtained
registration in April 1986, following its application to register
in April 1985.
The applicant seeks to have the trade mark expunged, claim
ing prior usage. It alleges having first sold its "NETMAIL"
software in July 1984, as part of its "IMAGINET" computer
network system. The applicant's "NETMAIL" program can
function properly only in association with the "IMAGINET"
system. Until May 1985, the "NETMAIL" software was not
sold in separate container/package to which was attached the
trade mark "NETMAIL". The "NETMAIL" product was
carried on a diskette and when sold, it was planted in the
computer system by inserting the diskette in a server, following
which there was no longer any need to keep the diskette. In the
demonstrations and in the use of the software by the purchasers
after the sale of the entire "IMAGINET" system, the associa
tion of the trade mark with the software product would be by
the use of the access code "NETMAIL" and the appearance of
the trade mark "NETMAIL" on the user's computer screen.
The respondent argues that since, prior to April 1985,
"NETMAIL" was only a function and part of the "IMAGI-
NET" system and could not function without it, there was
therefore no use nor a ware or service to which "NETMAIL"
was attached.
Held, the application should be allowed.
The applicant made use of the trade mark in 1984 when it
demonstrated its "IMAGINET" system to a purchaser. The
"NETMAIL" trade mark was on the software which was
transferred into the "IMAGINET" system at the time of
installation of the system in July 1984 at the purchaser's
premises. Prior to and after the sale and transfer of the
"IMAGINET" system, the "NETMAIL" mark and program
was shown to and seen by the purchaser's representatives. This
is adequate trade mark usage. If this were not so, it would, in
effect, not be possible for companies to protect their software
trade marks if they installed the software either at the vendor's
or purchaser's place of business because there would be no
adequate use.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Trade Marks Act, R.S.C. 1970, c. T-10, ss. 2, 4(1), 57(1)
(as am. by R.S.C. 1970 (2nd Supp.), c. 10, s. 64).
CASES JUDICIALLY CONSIDERED
APPLIED:
Mumm (G. H.) & Cie, Société Vinicole de Champagne
Successeur v. Andres Wines Ltd. et al. (1984), 3 C.P.R.
(3d) 199 (F.C.T.D.); Rainsoft Water Conditioning Co. v.
Rainsoft (Regina) Ltd. (1987), 14 C.P.R. (3d) 267
(F.C.T.D.); Edwin Co. v. S.D.B. Design Group Inc.
(1986), 3 F.T.R. 209 (F.C.T.D.); Infocard Inv. v. Frog-
nal Investments Ltd. (1986), Il C.P.R. (3d) 321 (Opp.
Bd.).
AUTHORS CITED
Fox, Harold G. Canadian Law of Trade Marks and
Unfair Competition, 3rd ed., Toronto: The Carswell
Company Limited, 1972.
COUNSEL:
W. C. Kent for applicant.
T. R. Lederer and W. L. Webster for
respondent.
SOLICITORS:
Burke- Robertson, Chadwick & Ritchie,
Ottawa, for applicant.
Osler, Hoskin & Harcourt, Ottawa, for
respondent.
The following are the reasons for order ren
dered in English by
TEITELBAUM J.: The applicant, BMB Compu-
science Canada Ltd., filed an Originating Notice
of Motion and Statement of Facts into the Federal
Court of Canada Registry on December 16, 1986
requesting the issuance of an order pursuant to
subsection 57(1) of the Trade Marks Act, R.S.C.
1970, c. T-10 [as am. by R.S.C. 1970 (2nd Supp.),
c. 10, s. 64] (Act) striking out Canadian Trade
Mark Registration No. T.M.A. 312,535 registered
on March 21, 1986 in the name of the respondent,
Bramalea Limited, for the trade mark "NET-
MAIL" for use in association with computer soft
ware. The ground for the request is:
that that entry of the said trade mark as it appears on the
Register does not accurately express or define the existing
rights of the respondent by reason of the fact that the said
registration is invalid on the grounds that:
(I) The respondent Bramalea Limited was not the person
entitled to secure registration of the said trade mark by
reason of the fact that as between the applicant and the
respondent, the respondent was not the first person to
use the trade mark in question in Canada; and
(2) The said trade mark is not distinctive of the respondent
in that it does not actually distinguish the wares in
association with which it has been registered by the
respondent from the wares of the applicant and is not
adapted so as to distinguish them.
To support the applicant's Originating Motion,
the applicant filed on January 15, 1987, the affida
vit of Marcel Brunschwiler, dated January 14,
1987, the Vice-President of Finance and Secretary
of the applicant, together with five exhibits, A, B,
C, D and E, the affidavit of John H. Cole, dated
January 14, 1987, an employee of the applicant
and, as he states "one of the authors of the 'N ET-
MA IL' computer program which was developed in
1984 by my company" together with one Exhibit,
"A", and the affidavit,. dated January 14, 1987, of
G. Geoffrey Flood, Assistant Controller for Plan
ning and Information Systems of George Weston
Limited.
In addition to the above mentioned affidavits,
the applicant filed a number of other affidavits,
amongst which are the affidavits of William M.
MacLean, President of the applicant company.
The respondent filed the affidavit of Steve Dud
geon, a Vice-President, Information Services of
respondent, who states he has been personally
involved in the development and marketing of
respondent's "NETMAIL" computer software
product. Attached to this affidavit is one exhibit,
Exhibit "A" entitled "A Report On Public Infor
mation on BMB and NETMAIL" prepared by a
company commonly known as Managerial Design
Inc. and dated April 30, 1986.
Both Marcel Brunschwiler and William M.
MacLean were cross-examined by respondent on
their affidavits.
Both the applicant and the respondent are in the
business of developing, manufacturing and mar
keting computer software. Both are located in
Ontario, in the Toronto region. Both claim rights
to the trade mark "NETMAIL" as used in asso
ciation with computer software designed to operate
an electronic mailing system. The respondent
obtained the registration of the trade mark "NET-
MAIL" on April 17, 1986 as registration No.
312,535 after making application to register on
April 3, 1985.
The facts leading up to the present proceedings
are contained in the documents and exhibits filed,
including the Brunschwiler affidavit, the Brunsch-
wiler cross-examination, the MacLean affidavit,
the MacLean cross-examination, the Flood affida
vit and the Cole affidavit.
The relevant facts can best be summarized as
follows:
The applicant, BMB Compuscience Canada
Ltd., alleges it developed a computer program to
which it attached the name "NETMAIL" in 1984.
It was designed to be used in association with the
applicant's "I MAG IN ET" computer network
system. As of July 26, 1984, there existed certain
documentation describing the functions of the
"NETMAIL" software.
John Cole, in his affidavit of January 14, 1987,
states that he has been employed by the applicant
since September 1983. His responsibilities include
the designing and writing of computer programs.
As such, he states, he was one of the authors of a
"NETMAIL" computer program developed in
1984 and which program "was developed to be an
electronic mail system to be used in association
with the `IMAGINET' system to my company
(the applicant)" (Paragraphs 2 and 3, Cole affida
vit). Mr. Cole, in paragraph 4 of his affidavit,
states that the "NETMAIL" software was devel
oped to allow users of the "IMAGINET" system
"to communicate with each other by sending mail
electronically to a specified destination". Exhibit
"A" to the Cole affidavit is the documentation
developed by the applicant describing the appli-
cant's "NETMAIL" program and which was "in
existence as of July 26, 1984" (Paragraph 5, Cole
affidavit).
The "NETMAIL" program is described, in
1984, as "part of the 'IMAGINET' package" but
also as a "product" in its own right. As Mr.
MacLean states on pages 5 and 6 of his cross-
examination, it is a piece of software which may be
purchased for use with the "IMAGINET" system
(Question 27 and reply). He maintains that the
word "NETMAIL" serves both as an access code
for users of the software and as "the name of a
product, and in order to invoke you can type
`NETMAIL' on the computer terminal" (page 6,
line, 33 cross-examination). The "NETMAIL"
software is always reliant on the "IMAGINET"
hardware in order to function properly (Questions
37 to 42, cross-examination) before April 3, 1985.
The applicant began to market "NETMAIL" in
the summer of 1984 and alleges that it was pro
moted in its own right each time the applicant
endeavoured to make a sale of the "IMAGINET"
system. At least twice during the summer of 1984,
when "NETMAIL" was first developed, in
demonstrations of the "IMAGINET" system to
George Weston Limited and to Computer Career
Institute, the applicant showed "NETMAIL" as a
separate software product for sale and use with the
"IMAGINET" system (paragraphs 5 and 6 of
MacLean affidavit and pages 9 to 11 of his cross-
examination). The "NETMAIL" software, until
after April 1985, was not sold in separate contain-
er/package to which was attached the trade mark
"NETMAIL". It would seem that in the demon
strations and in the use of the software by the
purchasers after the sale of the entire "IMAGI-
NET" system, the association of the trade marks
with the software product would be by the use of
the access code "NETMAIL" and the appearance
of the trade mark "NETMAIL" on the user's
computer terminal screen.
The affidavit of G. Geoffrey Flood confirms the
purchase of "NETMAIL" from the applicant in
July 1984. In paragraph 3 of his affidavit, Mr.
Flood states:
My company purchased from BMB Compuscience Canada
Ltd. in 1984 computer software including a software program
marketed by that company under the trade mark "NET-
MAIL". The "NETMAIL" software was initially installed in
our offices in July, 1984.
Sometime after April 1985, the applicant sepa
rated the "NETMAIL" software from the
"IMAGINET" system and began to market the
"NETMAIL" software to users of the "I MAG I
N ET" system.
The respondent has filed as its reply, two docu
ments, the Reply and Statement of Facts and the
affidavit of Steve Dudgeon, Vice-President, Infor
mation Services of Respondent. Steve Dudgeon, in
his affidavit, states that the respondent had devel
oped by December 1984 a mail system computer
software package. That in February 1985 the
applicant computer trade mark searches in
Canada and in the United States to determine the
availability of the trade mark "NETMAIL" did
not disclose any prior registration or pending
applications.
The respondent describes its own electronic
mailing software as an "independent software pro
duct" as opposed to that of the applicant which
was not sold or advertised separately nor identified
by a separate trade mark according to the respon
dent's submission.
On April 3, 1985, the respondent applied for
registration of the trade mark "NETMAIL" on
the basis of proposed use in association with its
electronic mailing software product, which regis
tration was allowed on January 29, 1986. In the
intervening period, respondent advertised and mar
keted its "NETMAIL" product.
The respondent became aware of the applicant's
use of the same trade mark for essentially the
same ware through media publicity on the appli
cant's products in October 1985, after which the
respondent requested that the applicant cease to
use the trade mark. The applicant subsequently
brought the present application for expungement
alleging prior use of the trade mark.
Issue
The issue is to determine what constitutes use of
a trade mark on a computer product. If it is
determined that the applicant had made use of the
trade mark "NETMAIL" prior to April 3, 1985,
then an order must issue to expunge the respon
dent's registered trade mark "NETMAIL". If
there was no prior use, then the trade mark "NET-
MAIL" as registered by the respondent shall
remain and the applicant will not be in a legal
position to use same.
Subsection 4(1) of the Trade Marks Act states
what constitutes use for the purposes of the present
proceedings:
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 such 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.
The applicant relies on the following of subsec
tion 4(1) "or it is in any other manner so associat
ed with the wares that notice of the association is
then given to the person to whom the property or
possession is transferred".
Applicant's Submission
The applicant submits that it first sold its
"NETMAIL" software in July 1984 to George
Weston Limited as the "NETMAIL" software
was included as part of its "IMAGINET" system.
That although the "NETMAIL" software was
sold as part of the "IMAGINET" system, it was,
by itself, an identifiable product. The applicant
admits that up to October 1985, the "NETMAIL"
software was only sold as part of the "IMAGI-
N ET" system. After October 1985, it was sold
independently. That prior to April 1985, the
"NETMAIL" product was carried on a diskette
and when sold, "it is `planted' in the computer
system by inserting the diskette into a `server' and
that there is therefore no longer any need to keep
the diskette". In July 1984, with regard to the sale
to George Weston Limited, it was the applicant
that would have "loaded the server" which meant
that the "NETMAIL" communication program
was loaded into the "IMAGINET" system and
when "called upon" the trade mark "NETMAIL"
would appear on the screen. According to Mr.
Flood, the "NETMAIL" software was intalled in
the offices of George Weston Limited in July
1984. I presume the installation . took place after
the sale of the "IMAGINET" system to George
Weston Limited.
Counsel for applicant submits that the "NET-
MAIL" product was marked at the time of the
transfer, from diskette to "server", it was elec
tronically marked. It was a product sold with the
"IMAGINET" system and that any customer of
applicant for the "IMAGINET" system would
have been fully aware of the software.
Applicant submits the "IMAGINET" system
with the "NETMAIL" software was also demon
strated at a trade show in Toronto in November
1984 (Brunschwiler cross-examination, question
128).
Respondent's Submission
Counsel submits that there are five basic points
to consider:
1. That prior to April 3, I985 "NETMAIL" in so far as it
was used by the applicant as applicable to no unique or
separate ware and that its use cannot have been a use
pursuant to Section 4 of the Trade Marks Act.
2. If wrong then must consider evidence of prior use as
submitted by applicant.
3. The question of actual sales before the April 3, 1985 date.
4. The question of actual sales after the April 3, I985 date.
5. The issue of the notion of time of transfer of property.
Respondent submits that in virtue of section 2 of
the Trade Marks Act, the definition of a trade
mark, reference is made to a ware or service. The
definition of trade mark as found in section 2
states:
2....
"Trademark" ...
(a) a mark that is used by a person for the purpose of
distinguishing or so as to distinguish wares or service <.
manufactured, sold, leased, hired or performed by him
from those manufactured, sold, leased, hired or performed
by others,
Respondent therefore submits the use, as found
in section 4 of the Act, must be in reference to a
ware or service.
Respondent admits that prior to April 3, 1985,
the applicant developed a mailing function but
which function was not sold separately prior to
April 3, 1985. It claims it was all done in conjunc
tion with the "IMAGINET" system as it, the
"NETMAIL" function, could only operate with
the "IMAGINET" system. It is respondent's con
tention that prior to April 3, 1985 the "NET-
MAIL" function was a part of the "IMAGINET"
system and could not function without it, there
therefore was no use nor a ware or service to which
"NETMAIL" was attached. It was, during 1984
and prior to April 3, 1985, simply a description of
a function of the "I MAG IN ET" system.
In paragraph 14 of the affidavit of Steve Dud
geon, it appears that the respondent, basing itself
on a report of Managerial Design Inc. (Exhibit A
to Dudgeon affidavit) claims that what "NET-
MAIL" was for the applicant was only a function
and not a separate product or a unique ware.
I am satisfied that the evidence leads me to
conclude that the applicant did have the name
"NETMAIL" associated with a ware.
The affidavit of Mr. Flood states very clearly
that George Weston Limited "purchased from
BMB Compuscience Canada Ltd. in 1984 comput
er software including a software program market
ed by that company under the trade mark `NET-
MAIL'. The `NETMAIL' software was initially
installed in our offices in July 1984" (paragraph 3
of Flood affidavit—underlining is mine). I am
therefore satisfied that a unique or particular ware
existed in July 1984 and that this "ware" was
computer software to which was attached the
name "NETMAIL".
There seems little doubt that the diskette upon
which the "NETMAIL" program existed was not
shown to Mr. Flood or anyone else up to April 3,
1985 but was transferred to the "IMAGINET"
system by the applicant at the time of installation
of the "IMAGINET" system at the premises of
George Weston Limited. When the mailing system
was called upon, the name "NETMAIL" appeared
and 1 believe appeared both as a trade mark and as
an access code to call the program into operation.
It was used both as a trade mark and access code.
It has been established by case law that if
evidence is shown that there was a user prior to the
registrant of the trade mark and that the trade
mark is being used for the same or similar wares
or services, this is sufficient ground for expunge -
ment (Rainsoft Water Conditioning Co. v. Rain-
soft (Regina) . Ltd. (1987), 14 C.P.R. (3d) 267
(F.C.T.D.); Edwin Co. v. S.D.B. Design Group
Inc. (1986), 3 F.T.R. 209 (F.C.T.D.); Infocard
Inv. v. Frognal Investments Ltd. (1986), 11 C.P.R.
(3d) 321 (Opp. Bd.)).
Respondent contends that up to April 3, 1985,
the "packaging" of the applicant's "NETMAIL"
program or function only comes up after the com
puter system "IMAGINET" is installed. Nothing
was shown to a purchaser, neither labels or any
other markings until, if at all, after a transfer of
possession had taken place.
Respondent submits that in order to have ade
quate use as stated in the Trade Marks Act, the
"NETMAIL" trade mark had to be used at the
time of the giving of possession. Respondent fur
ther submits that using the trade mark, as in this
case, either before the sale, during a demonstration
or in advertising or after the giving of possession is
not "adequate use". "Adequate use", according to
the respondent, would occur if the program at the
time of the actual transfer of possession was shown
and mentioned. Respondent claims there is no
evidence of this and thus no use was made of the
trade mark "N ET MAIL".
Conclusion
As I have stated, I believe it is established law
that a prior user of a trade mark may request the
Court to expunge a registration of a trade mark
registered by another party if the requesting party
can effectively prove prior usage and confusion
will occur.
Much was given in evidence of usage. I am fully
satisfied that the applicant made use of the trade
mark "NETMAIL" in the summer of 1984 when
it demonstrated its "IMAGINET" system to the
George Weston Limited company. I am satisfied
with the evidence that the "NETMAIL" trade
mark was on the software which the applicant
transferred into the "IMAGINET" hardware at
the time of installation of the system in July 1984
at the premises of George Weston Limited.
What we are dealing with is software which
forms a part of a computer system. It is not the
type of object, such as a pair of socks, to which one
can simply attach a label and which label is clearly
visible. Although this could have been done, it is
not to say that one could not "attach" the label
onto the program and which "label" would only
appear when the program is called upon by the
user of the computer.
In Mumm (G. H.) & Cie, Société Vinicole de
Champagne Successeur v. Andres Wines Ltd. et
al. (1984), 3 C.P.R. (3d) 199 (F.C.T.D.) Rouleau
J. indicated that "it is sufficient for the trade mark
to appear elsewhere than on the product itself so
long as notice of the association is given to those
for whom it is intended" (at page 201). Thus,
because Mumm's had sold at least a few cases of
champagne upon which was printed the trade
mark sought to be registered, they were entitled to
registration. On a separate, but noteworthy point,
Mr. Justice Rouleau indicated that on the question
of how much use was required to satisfy the Act
that there "may be as little as usage on a single
occasion" (at page 200).
Commenting on subsection 4(1) of the Trade
Marks Act in Canadian Law of Trade Marks and
Unfair Competition (3d) Fox has this to say at
pages 59 and 60:
... it is not essential that the trade mark be actually attached
to the wares themselves or that it be placed on the packages in
which they are distributed. That, of course, constitutes good
trade mark use, but it is also sufficient if the trade mark is in
any other manner so associated with the wares that notice of
the association is given to the person to whom the property in or
possession of the wares is transferred. Any of these acts must,
by definition, take place at the time of the transfer of the
property in or the possession of the wares or there is not
adequate trade mark use.
There is no reason for supposing that use in advertising,
circulars, pamphlets, etc. will not constitute use of the trade
mark within the meaning of the section if, at the time of the
transfer of the property in or possession of the wares, in the
normal course of trade, the trade mark 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.
... so long as the use of the mark is so associated with the
wares as to give the notice specified in the section, it is
suggested that it is immaterial whether the trade mark appears
on the wares themselves, on their wrappers or containers, or is
associated with them on show cards, display units, or delivery
vans, or in price lists, circulars or advertisements.
The relevant words, as pertaining to adequate
trade mark use are "Any of these acts must, by
definition, take place at the time of the transfer of
the property in or the possession of the wares or
there is not adequate trade mark use".
I am satisfied that prior to and after the sale
and transfer of the "IMAGINET" system the
"NETMAIL" mark and program was shown to
and seen by the representatives of George Weston
Limited. The applicant had demonstrated its wares
in association with the trade mark both before and
after the sale to George Weston Limited. This is
adequate trade mark usage. If this were not so, no
company would be able to sell its software and
protect its trade mark unless it delivered to the
purchaser of the software the actual software,
labelled with the trade mark at the time of giving
of possession. It would, in effect, not be possible
any longer for companies wishing to protect their
trade marked software to install it either at the
vendor's place of business or the purchaser's place
of business because there would be no proper use
of the trade mark and the software vendor would
lose the trade mark protection of his product. This
seems not to be in accord with sound business
principles.
Use occurred, for the "NETMAIL" software
when it was demonstrated to George Weston Lim
ited in July 1984 and when it was installed into the
"I MAG IN ET" system for use by the purchaser
George Weston Limited in the summer of 1984 at
the premises of George Weston Limited.
There therefore was prior usage of the trade
mark "NETMAIL" by the applicant.
The respondent, Bramalea Limited, was not the
person entitled to secure registration of the trade
mark "NETMAIL" by reason of the fact that
between the applicant and the respondent the
respondent was not the first person to use the trade
mark "NETMAIL" in Canada and the said trade
mark is not distinctive of the respondent in that it
does not actually distinguish the wares in associa
tion with which it has been registered by the
respondent from the wares of the applicant and is
not adapted so as to distinguish them.
The order for expungement shall issue.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.