T-1144-89
Eleanor A. Consulting Ltd. (Plaintiff)
v.
Eleanor's Fashions Limited (Defendant)
INDEXED AS: ELEANOR A. CONSULTING LTD. v. ELEANOR'S
FASHIONS LTD. (T.D.)
Trial Division, MacKay J.—Halifax, September
12, 1989; Ottawa, August 28, 1990.
Injunctions — To restrain use of names for women's cloth
ing store pending trial of trade mark infringement action —
Principle no injunction if disposing of action — Serious ques
tion to be tried, not prima facie case, threshold test — Case
not to be decided on merits at interlocutory stage — Pleadings
establishing serious issues — Respondent not adducing evi
dence of problems if injunction granted — Irreparable harm
not established.
Trade marks — Infringement Interlocutory injunction to
restrain use of names in association with women's clothing
store — Confusion — Deemed infringement Passing off
Serious question to be tried — Irreparable harm not
established.
This was an application for an interlocutory injunction pend
ing trial of a trade mark infringement action to restrain the
respondent from using "Eleanor's" or "Eleanor's Fashion Gal
lery" in association with a women's apparel retail store. Since
1986, the applicant has operated a retail store, which sells
custom-made and ready-to-wear women's clothing as well as
cosmetics and colour and fashion analysis services under the
trade mark "Eleanor A." Over three years, clothing sales
brought in about $22,000. The respondent has operated a retail
women's clothing store about 2.5 miles from the applicant's
premises since March 1989, under the trade name "Eleanor's
Fashion Gallery". The respondent sells only designer label
ready-to-wear clothing and accessories. Projected sales for the
first year were $240,000. A cease and desist letter was sent to
the respondent in March 1989 when the applicant's president
became concerned about confusion between the two businesses
after customers congratulated her on the opening of the new
store.
The applicant argued that the respondent's use of the names
"Eleanor's" and "Eleanor's Fashion Gallery" created a strong
prima facie case of confusion with the registered trade mark
"Eleanor A.", within Trade-marks Act, section 6, a use prohib
ited by paragraph 7(b), and a deemed infringement. It submit-
ted that infringement of the proprietary right in a registered
trade mark per se constitutes irreparable harm.
The respondent argued that the applicant's trade mark,
consisting largely of a common first name, is an inherently
weak mark, not entitled to broad protection. It was further
argued that courts should deny an injunction where, as here, to
do so would dispose of the action finally and that in such cases
an applicant must establish at least a prima facie case.
Held, the application should be dismissed.
The threshold test for an interlocutory injunction in trade
mark matters is a serious question to be tried, not a prima facie
case. The rationale for rejecting the prima facie test is that the
interlocutory court should not decide the merits of the case. To
assess whether an application raises a serious question to be
tried, recourse must be had to the pleadings. The causes of
action raised were infringement under section 19, deemed
infringement under section 20 and passing off pursuant to
paragraph 7(b). Confusion, as it relates to these provisions,
involves difficult issues of fact and law. There were serious
issues to be tried.
In answer to respondent's submission as to an injunction
disposing of the action finally, it had to be understood that the
question was not whether respondent would choose to proceed
to trial were an interlocutory injunction granted but whether, in
the circumstances and on the evidence presented at the inter
locutory stage, there would be nothing to be gained by the
unsuccessful party in the event of ultimate success at trial.
Respondent had not adduced evidence as to the costs or dif
ficulties it would face were the injunction granted. Indeed,
based on respondent's business growth expectations, it could be
very much in its interest to go on to trial were it to sustain loss
due to an interlocutory injunction.
There was little evidence of irreparable harm to either party
as either could be adequately compensated by damages or by
an accounting of profits. This conclusion was subject to con
sideration of the applicant's argument that infringement or
deemed infringement itself results in irreparable harm.
Although the unauthorized use of a registered trade mark
results in irreparable harm, it is insufficient to merely plead
infringement. Unless an applicant can demonstrate infringe
ment, there must be other evidence of irreparable harm. There
was here sufficient evidence neither of irreparable harm caused
by a trade mark having been knowingly infringed nor of
confusion to support a finding of deemed infringement.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Companies Act, R.S.N.S. 1967, c. 42.
Partnerships and Business Names Registration Act,
R.S.N.S. 1967, c. 225.
Trade-marks Act, R.S.C., 1985, c. T-13, ss. 6, 7, 19, 20.
CASES JUDICIALLY CONSIDERED
APPLIED:
Turbo Resources Ltd. v. Petro Canada Inc., [ 1989] 2
F.C. 451; (1989), 24 C.P.R. (3d) 1; 91 N.R. 341 (C.A.).
DISTINGUISHED:
Joseph E. Seagram & Sons Ltd. v. Andres Wines Ltd.
(1987), 16 C.I.P.R. 131; 16 C.P.R. (3d) 481; (1987), 11
F.T.R. 139 (F.C.T.D.); Syntex Inc. v. Novopharm Ltd.
(1989), 26 C.P.R. (3d) 481; 28 F.T.R. 124 (F.C.T.D.);
Maple Leaf Mills Ltd. v. Quaker Oats Co. of Can.
(1984), 2 C.I.P.R. 33; 82 C.P.R. (2d) 118 (F.C.T.D.).
CONSIDERED:
NWL Ltd v Woods, [1979] 3 All ER 614 (H.L.); Imperi
al Chemical Industries PLC v. Apotex Inc., [1989] 2
F.C. 608; (1989), 22 C.I.P.R. 201; 23 C.P.R. (3d) 1; 26
F.T.R. 31 (T.D.); Universal City Studios, Inc. v. Zellers
Inc., [1984] 1 F.C. 49; (1983), 73 C.P.R. (2d) 1 (T.D.).
REFERRED TO:
Munsingwear, Inc. v. Juvena Produits de Beauté SA
(1985), 5 C.P.R. (3d) 244 (Opp. Bd.); Asbjorn Horgard
AIS v. Gibbs/Nortac Industries Ltd., [ 1987] 3 F.C. 544;
(1987), 38 D.L.R. (4th) 544; 17 C.I.P.R. 263; 14 C.P.R.
(3d) 314; 12 F.T.R. 317; 80 N.R. 9 (C.A.); Sarah
Coventry, Inc. v. Abrahamian et al. (1984), 1 C.P.R. (3d)
238 (F.C.T.D.); Beam of Canada Inc. v. Arnold Holdings
Ltd. (1988), 19 C.P.R. (3d) 475; 18 F.T.R. 241
(F.C.T.D.); Popsicle Industries Ltd. v. Ault Foods Ltd.
(1987), 17 C.I.P.R. 86; 17 C.P.R. (3d) 1; 16 F.T.R. 186
(F.C.T.D.); Cochrane-Dunlop Hardware Ltd. v. Capital
Diversified Industries Ltd. (1976), 30 C.P.R. (2d) 176
(Ont. C.A.).
COUNSEL:
Diane E. Cornish for plaintiff.
Michael V. Coyle for defendant.
SOLICITORS:
Osler, Hoskin & Harcourt, Ottawa, for
plaintiff.
Thorpe, Buntain, Muttart & Forse, Kentville,
Nova Scotia, for defendant.
The following are the reasons for order ren
dered in English by
MACKAY J.: This is an application for an inter
locutory injunction pending trial of an action
already initiated. Relief is sought to restrain the
respondent, until trial or other disposition of the
action, from:
(i) offering to perform, performing or advertising
the services of the operation of a retail store selling
women's clothing and accessories or similar wares
in association with the trade marks and trade
names "Eleanor's" or "Eleanor's Fashion Gal
lery";
(ii) using or advertising those trade marks and
trade names or any other that is confusing with the
trade mark and trade name "Eleanor A.";
(iii) infringing Canadian trade mark registration
no. 563,184; and,
(iv) directing public attention to its services or
business in such a way as to cause confusion with
the wares, services and business of the applicant.
The basis of the action and of this application is
a claim that the respondent has infringed and is
deemed to have infringed the applicant's exclusive
right to the use throughout Canada of its regis
tered trade mark "Eleanor A."; that the respond
ent has directed and continues to direct public
attention to its wares, services and business in such
a way as to cause confusion between those and the
wares, services or business of the applicant and the
respondent's use of the trade marks and trade
names "Eleanor's" and "Eleanor's Fashion Gal
lery" is confusing with the applicant's registered
trade marks; that, if its activities continue, the
applicant will suffer irreparable harm; and that
the balance of convenience with respect to the
interlocutory injunction sought is in favour of the
applicant.
Background
Since June 1986, the applicant, Eleanor A. Con
sulting Ltd., 'a company incorporated in Ontario,
has operated a retail store in Kentville, Nova
Scotia, selling women's clothing and accessories,
body care preparations, cosmetics and colour and
fashion analysis services, as well as cosmetic con
sultation. This business is operated under the trade
name "Eleanor A." That trade name is frequently
presented in script form, written on one horizontal
line, and is so used on the sign identifying the store
in its window, on business cards, newsletters, in
advertisements, on labels affixed to cosmetics, and
within the second of two registered trade marks as
used on hangtags affixed to items of clothing. The
plaintiff [applicant] states that its trade marks are
often associated with the colour pink which is
often used as a background for the trade mark and
the trade name. That colour is said to be featured
in its store premises, a feature questioned in regard
to the store by the secretary-manager of the
respondent.
The first mark registered by the applicant is
"Eleanor A.", Canadian registration number
346,759, applied for in May 1986 and registered
October 21, 1988, for use in association with per
fumes, cosmetics, cosmetic brushes, bags and
accessories, body care preparations and the opera
tion of colour analysis and cosmetic consultation
services. I note for the record that the certificate of
registration includes the trade mark "Eleanor A."
in printed capital letters, not in script form and
that no design for use of the trade mark is included
in the registration certificate. The second trade
mark of the applicant is "Palettes by Eleanor A.",
Canadian application number 563,184, applied for
in May 1986, registration of which was still pend
ing in June 1989 when this action commenced.
This second trade mark was applied for use in
association with clothing and accessories, and the
operation of a business of fashion analysis, person
al shopping and wardrobe planning, as well as a
retail business dealing in clothing and accessories.
Since June 1986 the applicant has offered for
sale and has sold, in its Kentville store, women's
clothing and accessories bearing a number of dif
ferent trade marks. In May 1987 it began intro
ducing its own line of fashion clothing sold under
its trade marks. Initially the marks were used in
association with sweaters, in June 1988 in associa
tion with women's casual clothing and lingerie and
in October 1988 with dresses. Both trade marks
are said to have been used in association with this
line of fashion clothing with a pink hangtag bear
ing the trade marks attached to each item of
clothing.
In the three years from July 1986 to June 1989
the applicant's revenues from sales exceeded a
total of $63,000 for services and wares, some
$28,000 in the first year and in excess of $17,000
in each of the second and third years. Revenues
attributable to sales of women's clothing vary from
28 to 39 percent for these years, which I calculate
as about 35 percent or $22,000 for the entire
period. The clothing and accessories sold is said to
include ready-to-wear garments bearing different
trade marks, but since the introduction of its own
line of fashion clothing in May 1987, now a fea
ture of the applicant's business, customers also
choose from a relatively small number of samples
of the applicant's design or from the applicant's
catalogue. From this choice garments are then
custom-made to fill a customer's order. This selec
tion may follow a consultation service that advises
on the most suitable choice of colours for the
customer and on wardrobe planning.
Since March 1989, the respondent, Eleanor's
Fashions Limited, has operated a retail women's
clothing store in New Minas, approximately 2.5
miles from the applicant's Kentville premises,
operating under the trade name "Eleanor's Fash
ion Gallery". It is not clear whether it uses its
registered corporate name "Eleanor's Fashions
Limited" for some corporate purposes.
The respondent company was incorporated
under the Nova Scotia Companies Act, R.S.N.S.
1967, c. 42 as amended, in November 1988 and in
December of that year the respondent registered
the business name "Eleanor's Fashion Gallery"
under the Nova Scotia Partnerships and Business
Names Registration Act, R.S.N.S. 1967, c. 225.
That business name or trade name is featured on
the sign identifying the respondent's premises at
New Minas, on business cards, invoices and other
business forms, and in advertisements placed and
packaging used by the respondent. Generally the
name is used with the word "Eleanor's" in script
form on slight angle rising to the right and under
lined, with the words "Fashion Gallery" immedi
ately following in larger block capital print on a
horizontal line. The name is often used in associa
tion with a colour which the applicant here charac
terizes as similar to the pink colour it has used in
association with its trade mark, a comparison not
accepted by the respondent who denies using pink
and describes the colour it uses as plum.
In contrast to the applicant's business, the
respondent sells only ready-to-wear "designer
label" women's clothing and accessories. When
this matter was heard in September 1989 the store
was said to contain stock in excess of $100,000. In
its first few months of operation the respondent's
sales of women's clothing ranged from $14,000 to
$20,000 per month and projected annual sales for
the first year were $240,000.
In February 1989 the bank, in error, debited the
applicant's account with a charge which upon
enquiry was attributable to the issue of a letter of
credit on behalf of a business using the name
"Eleanor" which was expected to open in New
Minas. In early March the applicant's president,
Eleanor A. Lynch, became aware of the existence
of the respondent when she saw a newspaper
advertisement concerning the opening of the
respondent's store in New Minas. At that time, she
became concerned that there might be some confu
sion in the minds of customers in regard to the two
establishments because of the use of the name
"Eleanor" which is common to both businesses,
and incidentally is the common name of the princi
pals involved in the two corporate parties in this
application. She felt justified in this opinion when
some customers and friends congratulated her on
the opening of the new store believing it to be
another store of the applicant company.
On March 23, 1989, the applicant's counsel
wrote to the respondent, bringing to its attention
the applicant's registered trade mark and use of
the trade name "Eleanor A.", expressing concern
about the respondent's use of its name as likely to
cause confusion and infringement of the appli
cant's rights, and urging that use by the respond
ent of the names "Eleanor's" and "Eleanor's Fash
ion Gallery" cease. When no settlement of the
matter was achieved, the applicant commenced
this action on June 7, 1989. In July this applica
tion for interlocutory relief was filed.
In certain paragraphs of the statement of claim
initiating action in this matter the applicant
alleges, as grounds for the relief sought and in
relation to the Trade-marks Act, R.S.C., 1985,
c. T-13:
13. At the time the Defendant commenced use of the trade
marks and trade-names "ELEANOR'S" and "ELEANOR'S
FASHIONS GALLERY", it did so with knowledge of the
Plaintiff's trade-mark and trade-name "ELEANOR A." and
with the intention of trading on the reputation built up by the
Plaintiff in its trade-mark and trade-name.
14. Each of the trade-marks and trade-names "ELEANOR'S"
and "ELEANOR'S FASHION GALLERY" as used in
Canada by the Defendant as alleged in paragraph 12 is, and at
all material times has been, confusing with the Plaintiff's
trade-mark and trade-name "ELEANOR A.".
15. Each of the trade-marks and trade-names "ELEANOR'S"
and "ELEANOR'S FASHION GALLERY" as used in
Canada by the Defendant as alleged in paragraph 12 is, and at
all material times has been, confusing with the Plaintiff's
trade-mark "PALETTES BY ELEANOR A.".
16. By its acts referred to in paragraph 12, the Defendant has
directed public attention to the operation of its retail store
selling women's clothing and accessories in such a way as to
cause confusion in Canada between the Defendant's wares,
services and business and the wares, services and business of the
Plaintiff contrary to the provisions of section 7(b) of the
Trade-marks Act, R.S.C. 1985, c. T-13.
17. By its acts referred to in paragraph 14, the Defendant has
infringed and is deemed to have infringed, the exclusive rights
of the Plaintiff referred to in paragraph 10.
Relief sought in the action yet to be tried includes
an interlocutory and a permanent injunction, dam
ages or an accounting of profits, an order for
delivery up and destruction of signs and any print
ed matter in the respondent's possession or control
which are marked with the names objected to here,
and a declaration that the respondent has
infringed the applicant's exclusive rights in and to
its registered trade mark "Eleanor A."
In its motion for an interlocutory injunction the
applicant states the grounds as follows:
1. that the Plaintiff has a strong prima facie case that the
Defendant has directed and intends to continue to direct
public attention to its wares, services and business in such a
way as to cause or be likely to cause confusion in Canada
between its wares, services or business and the wares, ser
vices or business of the Plaintiff;
2. that the Plaintiff has a strong prima facie case that the
Defendant has infringed and intends to continue to infringe
the Plaintiff's exclusive right to use throughout Canada the
trade-mark "ELEANOR A." registered under No. 346,759;
3. that the Plaintiff will suffer irreparable harm if the inter
locutory injunction sought herein is not granted; and
4. the balance of convenience with respect to the interlocutory
injunction sought herein is in favour of the Plaintiff.
I note that in her affidavit opposing this applica
tion, the Secretary, Manager and principal of the
respondent company, Eleanor Graves, states that
the only occasion on which the use of the word
"Eleanor's" has been without the words "Fashion
Gallery" in relation to the respondent's business,
was in one advertisement in the local Kentville
Advertiser, a newspaper, made in error by the
publisher, for which error apology was subsequent
ly made. The only use made or authorized by the
respondent of its name is the total name "Elean-
or's Fashion Gallery".
At the hearing of this application counsel
indicated that the applicant would give the usual
undertaking to meet any damages arising to the
detriment of the respondent if the granting of an
interlocutory injunction should be found unwar
ranted by the outcome of the trial. Further, to
meet the respondent's questioning of the appli
cant's ability to meet this undertaking, counsel
indicated the applicant's willingness to post a bond
if that be necessary. Counsel for the respondent
advised at the same time that the respondent had
filed an undertaking to keep records and accounts
as a basis for determination of damages or an
accounting of profits in the event the plaintiff is
successful at trial.
Legislation
The relief claimed by the applicant is based on
the Trade-marks Act, and in particular sections 6,
7(b), 19 and 20, which provide:
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
(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;
19. Subject to sections 21 and 32, 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. 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 depreciat
ing the value of the goodwill attaching to the trade-mark.
Arguments of the Parties
The applicant states that the central issue in this
application, as in the action which seeks a perma
nent injunction, is confusion created by the
respondent by its use of the trade names "Elean-
or's" and "Eleanor's Fashion Gallery" in associa-
tion with the services of selling women's clothing
and the applicant's use of its trade marks and
trade name "Eleanor A." in association with its
wares and services. Counsel submits that, not only
can the applicant demonstrate a serious question
to be tried, but also, it has a strong prima facie
case for confusion.
Counsel's arguments to support this contention
are based mainly on the premise that the appli
cant's use of its "Palettes by Eleanor A." trade
mark in association with women's clothing consti
tutes simultaneous use of its "Eleanor A." trade
mark. In the alternative, she cites Munsingwear,
Inc. v. Juvena Produits de Beauté SA (1985), 5
C.P.R. (3d) 244 (Opp. Bd.) to argue that the
cosmetics and associated wares and services
associated with the registered trade mark "Eleanor
A." and the clothing associated with the respond
ent's trade name are of the same general class of
wares and services, in the women's fashion trade.
As a result, use of a similar mark in association
with these kinds of articles can lead to confusion as
to their source.
Counsel further argues that the respondent's use
of the word "Eleanor" is a use of the essential
features or substantially all of the applicant's reg
istered trade mark "Eleanor A." The addition of
the descriptive words "Fashion Gallery" does not
avoid confusion and does not warrant the respond
ent's use of the applicant's trade mark. It is sub
mitted that the name "Eleanor" remains the domi
nant feature of the respondent's trade name.
Counsel submits that, based on a first impres
sion of the totality of the trade marks and trade
names in question, confusion exists. The Court
should not analyze the two marks in detail for
differences. Rather, on first impression, script and
accentuation of the word "Eleanor" and the colour
used in association with it in the respondent's trade
name all contribute to confusion and an associa
tion of the two businesses in the minds of the
public and of customers.
In addition, the applicant submits evidence in
the form of supporting affidavits by third parties
and other incidents related by the affiant, Eleanor
A. Lynch, which it claims demonstrates actual
confusion. It cites Asbjorn Horgard AIS v. Gibbs/
Nortac Industries Ltd., [1987] 3 F.C. 544 (C.A.)
to assert that this evidence is persuasive to support
an inference of a likelihood of confusion.
As I understand the essence of the applicant's
case, it is that the respondent's use of the names
"Eleanor's" and "Eleanor's Fashion Gallery" cre
ates a strong prima facie case of confusion with
the registered trade mark "Eleanor A.", within the
meaning of section 6 of the Trade-marks Act, a
use prohibited by paragraph 7(b) and a deemed
infringement under section 20. It submits that
infringement of the proprietary right in a regis
tered trade mark, per se, constitutes irreparable
harm not redressable in damages. That harm may
have several aspects including the loss of the appli
cant's right to exclusive use of its registered trade
mark, opening the door to attack on the validity of
the registration on grounds that it is not distinc
tive, the implied recognition of a licence to the
respondent, and implicitly to others, to use trade
marks confusingly similar to the applicant's. That
harm also includes the loss of goodwill and reputa
tion which place the very existence of the appli
cant's business in jeopardy since all aspects of the
business are operated in association with the
"Eleanor A." trade mark.
For its part, the respondent denies that the
applicant has made a strong prima facie case. This
is mainly because the applicant's trade mark, con
sisting largely of a common first name, is an
inherently weak mark, not entitled to a wide ambit
of protection and the trade marks or trade names
can be scrutinized in detail. Small differences in
the respondent's use of the name "Eleanor" are
sufficient to distinguish it from the applicant's
mark. The respondent cites Sarah Coventry, Inc. v.
Abrahamian et al. (1984), 1 C.P.R. (3d) 238
(F.C.T.D.) in support of its position.
The respondent further asserts that what the
applicant calls incidents of actual confusion are in
some cases not evidence of confusion at all, and to
the extent there may be any confusion it is directly
the result of the inherently weak and indistinctive
mark registered by the applicant. Moreover, it is
urged that if there be any confusion it does not go
to the source of the wares and services, as required
by section 6 of the Trade-marks Act. Rather, any
confusion relates to the trade mark and trade
name, per se.
In addition, the respondent submits that the
nature of the two businesses, as well as the wares
sold, are sufficiently different as to avoid any
confusion.
Finally, the respondent argues that the principle
in NWL Ltd y Woods, [1979] 3 All ER 614 (H.L.)
is applicable to the present case. Given the nature
and size of its business, the geographical area and
the financial factors involved, it claims that it
would not be worthwhile to continue the matter to
trial, if an injunction is granted. Indeed, in that
event, counsel asserts that the respondent will not
pursue the matter.
Counsel for the respondent interprets the juris
prudence to mean that, where the principle in
Woods is applicable, the applicant must demon
strate at least a prima facie case in order to meet
the threshold test for an injunction. It is submitted
that a prima facie case is not made out in this
instance, and thus the application should be
dismissed.
Finally, counsel asserts that, should the injunc
tion be granted, the respondent's business is likely
to fail due to the cost in reputation, as well as in
financial terms, that would result from a change in
trade name. He submits that, regardless of its
undertaking, the applicant would not have the
financial resources to compensate the respondent
for a failed business in the event that the applicant
did not succeed at trial.
Criteria for an Interlocutory Injunction
This Court is bound by the decision in Turbo
Resources Ltd. v. Petro Canada Inc., [ 1989] 2
F.C. 451 (C.A.) where Stone J.A. set out the
threshold test for interlocutory injunctions in trade
mark matters as "a serious question to be tried",
not a prima facie case. Beyond this threshold the
Court assesses the balance of convenience, includ
ing the respective claims of the parties as to the
likelihood of irreparable harm, not compensable in
damages, from the refusal or the granting of an
injunction at this stage, before trial.
In my opinion, this threshold test is not altered
by the principle in Woods, supra, that where the
grant or refusal of an injunction would dispose of
the action finally, that result should be avoided.
Stone J.A., in Turbo Resources at pages 462-463
and 475-476, recognizes this principle in excep
tional cases and indicates that the Court may then
forego further weighing of the balance of conve
nience. He does not hold that the threshold test is
altered. See also, Syntex Inc. v. Novopharm Ltd.
(1989), 26 C.P.R. (3d) 481 (F.C.T.D.), at page
495. In Woods, supra, at pages 625-626, Lord
Diplock expresses the principle as a key element in
weighing the balance of convenience, not as an
exception to the threshold test.
That the Woods decision, adopted by Turbo
Resources, should not affect the threshold test is
logical in view of the rationale behind the rejection
of a prima facie test. It is not the task of the
interlocutory court to resolve conflicts of evidence
as to facts or to decide difficult questions of law.
In other words, it should not decide on the merits
of the case: see Turbo Resources, supra, at pages
462-463. The principle in Woods is consistent with
this approach to avoid a ruling prior to trial of the
issues, which would decide the merits of the case
for all practical purposes.
The Threshold Test
To assess whether an application raises a serious
question to be tried, recourse is had to the plead-
ings in light of the evidence presented: see Turbo
Resources, supra, at page 468. The causes of
action in the present case are infringement of
exclusive rights to a registered trade mark pro
vided by section 19 of the Trade-marks Act,
deemed infringement pursuant to section 20 and
passing off pursuant to paragraph 7(b) of the Act.
Confusion, as it relates to these provisions, involves
difficult issues of fact and law. In this case, assess
ments must be made as to how the differences in
the wares and services offered by the parties affect
the likelihood of confusion; whether the respond
ent's use of the name "Eleanor" consists of use of
the applicant's registered trade mark "Eleanor
A.", or is deemed use because of confusion; wheth
er the applicant's mark is sufficiently known to
make it distinctive and entitled to wide protection;
what knowledge the respondent had, when it com
menced use of its trade name, of the existence of
the applicant's trade mark or trade name. It
cannot be said, then, that the applicant's case is
frivolous or vexatious. I have no doubt that these
are serious issues to be tried and their determina
tion will depend on the evidence adduced at trial.
The Woods Principle
As noted previously, counsel for the respondent
asserts that, if an injunction is granted, there
would be nothing left in his client's interest to
warrant proceeding to trial, and indeed, he states
categorically that the respondent will not go to
trial.
In Turbo Resources, supra, at page 476, Stone
J.A., quoting Lord Diplock in Woods, states that
the principle applies in a case in which the grant or
refusal of an injunction "would, in effect dispose of
the action finally in favour of whichever party was
successful in the application, because there would
be nothing left on which it was in the unsuccessful
party's interest to proceed to trial". It does not
depend upon whether or not the unsuccessful party
is likely to elect not to proceed to trial. That is a
decision within its own discretion. Rather, the
principle applies where in the circumstances of the
case and on the evidence presented at the inter
locutory stage, there would be nothing to be gained
by the unsuccessful party in the event of its ulti
mate success at trial.
In my view the circumstances and the evidence
thus far presented do not warrant the application
of the Woods principle. If the interlocutory injunc
tion here sought is not granted the applicant
claims it will suffer irreparable harm and loss of
goodwill and reputation. It would, however, stand
to gain, both in damages and in the award of a
permanent injunction, if it proceeds to trial and is
then successful. As for the representations of coun
sel for the respondent about the likely course of
events if an injunction were now granted, mere
representations of these concerns do not bring the
case within the Woods principle. Here there was
no evidence of costs anticipated if the respondent,
as a result of an interlocutory injunction were
required to change signs, stationary and business
forms. There was no evidence of costs or difficul
ties of having to change the respondent's name or
its trading name. Nor was there evidence that in
the retail trade in women's clothing, sales of
designer label clothing depend largely, or at all, on
association with the trade name of the retailer in a
way that would seriously affect the viability of
sales if the retailer's name were changed. Finally,
in view of the respondent's expectations for its
business growth in its first year, it would perhaps
be greatly in its interest to proceed to trial if an
injunction at this stage were seen to cause it loss
and it is ultimately successful at trial. I conclude
that this case is simply not within the Woods
principle.
Balance of Convenience and Irreparable Harm
In Turbo Resources, supra, at pages 473 - 474,
Mr. Justice Stone outlines the factors which are to
be weighed in the balance of convenience as
follows:
(a) Where a plaintiffs recoverable damages resulting in the
continuance of the defendant's activities pending trial
would be an adequate remedy that the defendant would be
financially able to pay, an interlocutory injunction should
not normally be granted;
(b) where such damages would not provide the plaintiff an
adequate remedy but damages (recoverable under the
plaintiffs undertaking) would provide the defendant with
such a remedy for the restriction on his activities, there
would be no ground for refusing an interlocutory
injunction;
(c) where doubt exists as to the adequacy of these remedies in
damages available to either party, regard should be had to
where the balance of convenience lies;
(d) where other factors appear to be evenly balanced, it is
prudent to take such measures as will preserve the status
quo;
(e) where the evidence on the application is such as to show
one party's case to be disproportionately stronger than the
other's, this factor may be permitted to tip the balance of
convenience in that party's favour provided the uncompen-
satable disadvantage to each party would not differ widely;
(g) [sic] other unspecified special factors may possibly be
considered in the particular circumstances of individual
cases.
These factors do not represent water-tight com
partments to be considered consecutively; rather,
they tend to overlap. Strength in one factor can
compensate for weakness in another. Yet, a key
factor identified by Stone J.A. at the beginning is
that, barring exceptional cases, no injunction
should issue unless the applicant can demonstrate
some irreparable harm, not appropriately remed
ied in damages, from the continuation of the
respondent's activities.
In this application there is little evidence
adduced upon which a finding of irreparable harm
to either party could be based, except for the
applicant's argument of assumed irreparable harm
from infringement or deemed infringement of its
registered trade mark. Aside from that important
issue it would seem to me that this case is one
where any injury to either party from the activities
of the other can be adequately addressed by dam
ages, or if the plaintiff [applicant] is successful by
an accounting of profits, to be determined after all
the evidence is in and considered at trial.
That conclusion, however, depends upon con
sideration of the applicant's argument that
infringement or deemed infringement of its regis
tered trade mark "Eleanor A." in itself results in
irreparable harm. For reasons dealt with in Syntex
Inc. v. Novopharm Ltd., supra, it is my view that
the unauthorized use of a registered trade mark
results in irreparable harm. It is insufficient, how
ever, to merely plead an infringement of a trade
mark in order to establish such harm. Unless the
applicant can demonstrate infringement of its reg
istered trade mark at this stage there must be
other evidence of irreparable harm if an interlocu
tory injunction is to be warranted, regardless of
the other factors considered in the balance of
convenience.
In the cases cited by the applicant where the
Court has found infringement resulting in irrepa
rable harm, there was, in addition to the use of the
applicant's trade mark, knowledge on the part of
the alleged infringer of the applicant's trade mark
and that its own acts were unauthorized uses that
might well be found to constitute infringement.
(See: Joseph E. Seagram & Sons Ltd. v. Andres
Wines Ltd. (1987), 16 C.I.P.R. 131 (F.C.T.D.);
Maple Leaf Mills Ltd. v. Quaker Oats Co. of Can.
(1984), 2 C.I.P.R. 33 (F.C.T.D.); Syntex Inc. v.
Novopharm Ltd., supra, at pages 501, 508).
By copying a trade mark or by commencing an
activity known to be a possible infringement of a
trade mark, a person takes a calculated risk that
he will not be infringing another's property rights.
That a court may then give more credence, at this
stage, to evidence pointing to infringement is part
of that risk.
This element of knowledge appears, not only in
the cases cited by the applicant, but also in a
number of other trade mark cases where infringe
ment was found to cause irreparable harm: see, for
example, Beam of Canada Inc. v. Arnold Holdings
Ltd. (1988), 19 C.P.R. (3d) 475 (F.C.T.D.); Pop-
sicle Industries Ltd. v. Ault Foods Ltd. (1987), 17
C.I.P.R. 86 (F.C.T.D.). In addition, a number of
other cases dealing with intellectual property, in
patent and copyright, which I cited in Syntex Inc.
v. Novopharm Ltd., supra, in support of the prin
ciple that infringement itself may constitute
irreparable harm, also contain the element of
knowledge. For example, in Imperial Chemical
Industries PLC v. Apotex Inc., [1989] 2 F.C. 608
(T.D.), the respondent was a compulsory licensee
of the applicant's patented drug. A change in the
Patent Act [R.S.C. 1970, c. P-4 (as am. by S.C.
1987, c. 41)] meant that it could no longer sell this
drug for consumption in Canada as a compulsory
licensee. Yet it continued to do so. In Universal
City Studios, Inc. v. Zellers Inc., [1984] 1 F.C. 49
(T.D.), the copyright infringement involved a
counterfeit E.T. doll. When an article is so like one
protected by copyright as to be termed counterfeit,
deliberate copying and infringement may be
assumed.
In this case the applicant alleges in paragraph
13 of its statement of claim that "At the time the
Defendant commenced use of the trade-marks and
trade-names `Eleanor's' and `Eleanor's Fashions
Gallery', it did so with knowledge of the plaintiff's
trade-mark and trade-name `Eleanor A.' and with
the intention of trading on the reputation built up
by the Plaintiff in its trade-mark and trade-name".
No evidence of knowledge on the part of the
respondent is offered to support this allegation
except the "cease and desist" letter from the appli
cant's solicitor dated March 23, 1989, after the
respondent completed planning and preparations
for its business, which must have begun not later
than the date of its incorporation in November
1988, and after it had begun operations apparently
early in March. The applicant's president does
describe in her affidavit the various means used to
advertise the business in Kentville since 1986 and
that may lead to an inference, after trial of the
issues, about knowledge on the part of the respond
ent at some earlier date, but I cannot at this stage
make any finding of this sort.
In my view, the alleged infringer should be
shown to be aware that his acts may constitute
infringement, or that he is copying, when he com
mences the activity. Only then can he be said to
have taken a calculated risk.
In both Maple Leaf Mills and Syntex, supra,
upon which the applicant relies, an interlocutory
injunction was granted where the registered trade
mark of the applicant was known to the respondent
who chose to use it, taking a calculated risk that
the mark would be held invalid or that infringe
ment would not be found. In Seagram, supra,
upon which the applicant also relies, the registered
trade mark was not copied or used in its entirety,
but again there was evidence of the respondent's
knowledge of that mark when it commenced use of
its own mark or name utilizing much of the regis
tered mark.
In this case I conclude that at this stage there is
no evidence of knowledge on the part of the
respondent of the applicant's trade mark or its
trade name or even of its existence at the relevant
time, that is, before the respondent commenced
activities using the trade name it adopted.
There is also no evidence, and no allegation of
the respondent's use of the registered trade mark
"Eleanor A." The circumstances are different
from those in Maple Leaf Mills and Syntex,
supra. They are more closely parallel to those in
Seagram, supra, where Cullen J. found use of the
substantial features of a registered trade mark,
though that use was not copying. In my view,
however, the lack of evidence, at this stage, of
knowledge on the part of the respondent at the
relevant time, so that it cannot here be said the
respondent took a calculated risk in using its trade
name, is sufficient to distinguish the case from
Seagram. In addition, in the latter case, the wares
bearing the mark found to be infringing a regis
tered mark, were sold through the same outlets,
provincial retail outlets for alcoholic beverages, as
would carry the applicant's wares with its regis
tered mark.
In my view, at this stage, the evidence does not
warrant a finding that the exclusive proprietary
right of the applicant under section 19 of the Act
is infringed by the activities of the respondent that
give rise to this application, and thus irreparable
harm is not established from acts that are clearly
infringements of the applicant's rights.
This leaves the central arguments of the appli
cant to be dealt with, that is, that there is in this
case deemed infringement of the applicant's rights
as provided by section 20 of the Act, arising from
the respondent's use of a confusing trade mark or
trade name, and infringement of this sort supports
a conclusion that irreparable harm is caused to the
applicant by the respondent continuing that use.
Alleged confusion is also the basis of the appli
cant's claim that the respondent here has violated
paragraph 7(b) of the Act.
Section 6 of the Act deals with confusing trade
marks and trade names. In all of the circumstances
there set out for determining when a mark or a
name is confusing the test is whether use of the
trade mark or trade name would be likely to lead
to the inference that the wares or services associat
ed with them are manufactured, sold, leased, hired
or performed by the same person whether or not
the wares or services are of the same general class.
As noted earlier, the respondent here argues, in
relation to the evidence of confusion adduced by
affidavits in support of this application, that if
these are indicative of confusion in any way that is
not confusion about the source of the wares sold by
the parties here but only about their trade marks
and trade names themselves. For the applicant, as
also noted earlier, it is submitted that the evidence
presented supports a conclusion of use by the
respondent of marks or names confusing with the
applicant's registered trade mark, "Eleanor A."
The question of use of a trade mark or trade
name in a manner likely to cause confusion with
another trade mark raises difficult questions of
fact and of law, not easily resolved until trial when
all of the evidence and argument has been con
sidered by the trial judge. Subsection 6(5) of the
Act sets out the principal factors to be considered
in "all the surrounding circumstances". It is useful
to briefly review those factors and some issues
which arise on the basis of the affidavit evidence
presented at this stage. The following are these
principal factors.
(a) Inherent distinctiveness of the trade marks
or trade names and the extent to which they
have become known.
To assess this in this case requires conclusions
about the protection to be afforded to a trade
mark largely comprised of a common first name
of women and the evidence of extensive use of
the mark or the name in light of the applicant's
claim, in relation to women's clothing, that its
second registered trade mark, "Palettes by
Eleanor A.", used in association with its
designed clothing, is a use of its first trade mark,
"Eleanor A." Consideration must also be given
to the record of advertising by the applicant,
much of it in relation to cosmetics and colour
analysis services, in determining the extent to
which its name has become known, especially in
view of its record over three years of limited
revenues and particularly revenues attributable
to sales of women's clothing.
(b) Length of time the trade marks or trade
names have been in use.
On this relatively straight-forward aspect one
can draw certain conclusions about the appli
cant's use of its registered trade marks and
perhaps certain inferences about the respond
ent's use of its trade name. A conclusion may
have to be drawn about the applicant's use of its
trade mark "Eleanor A." within the mark
"Palettes by Eleanor A," in association with
sales of women's clothing and accessories. The
evidence, even about the time of use of its name
by the respondent is not complete or precise at
this stage. While it may be that the Court may
assume that a mark long used has gained the
reputation and goodwill that the Act is designed
to protect (see: Cochrane-Dunlop Hardware
Ltd. v. Capital Diversified Industries Ltd.
(1976), 30 C.P.R. (2d) 176 (Ont. C.A.) at page
185), this assumption cannot hold if there be
evidence to the contrary. While the apparent
longer use of its trade marks by the applicant in
this case would tend to favour an inference that
it has become established and gained a reputa
tion and goodwill what is the significance for
such an inference of the applicant's limited reve
nues from sales of clothes when compared with
the respondent's significantly greater monthly
sales volume in its first few months of
operation?
(c) The nature of the wares, services or
business.
Here the Court must compare the activities of
the two parties in selling wares and services.
Whether they are of the same general class may
be useful to assess, for though section 6 of the
Act provides that it is not necessary that they be
so, if that is not the case the respondent's argu
ment that there is no confusion as to the source
of the wares or services may have greater
weight. While both parties may be considered to
serve women's fashion interests, is the likelihood
of confusion more relevant among prospective
customers than among other members of the
public? The customer group is unlikely to find
similarity between the respondent's designer
label clothing and accessories and the appli
cant's creative, designed clothing, cosmetics and
associated services.
(d) The nature of the trade.
While both parties operate retail businesses
which generally may be described as serving the
women's fashion trade, differences, if any, in the
clientele sought and served by each may have
some significance.
(e) The degree of resemblance between the
trade marks or trade names in appearance or
sound or in the ideas suggested by them.
Perhaps this factor could be assessed at this
stage but only the applicant has addressed this
issue in argument.
This cursory review of the principal factors to be
assessed in considering a claim concerning confus
ing use indicates a number of matters on which
evidence and argument are as yet incomplete. This
is the heart of the applicant's case as thus far
developed. Some of these factors could be assessed
at this stage more readily than others, but taken
together all the relevant factors are not now fully
dealt with in evidence and argument. It is my
conclusion that rather than attempt assessments
based on inferences, which would prejudge issues
that are central to the case for relief sought in the
action, those matters are best left to the judge at
trial.
At this stage evidence of confusion is inadequate
to base a finding of deemed infringement under
section 20 of the Act. Thus, for this interlocutory
proceeding I conclude that irreparable harm
cannot be assumed, despite the assertions of the
applicant about the likelihood of such harm, in the
absence of evidence about that harm claimed.
Thus, on the question of irreparable harm I have
not been persuaded by arguments of the applicant
that it will suffer such harm if the interlocutory
relief sought is not granted.
Conclusion
I am left with the conclusion that any loss to
both parties pending trial in this case can be
adequately addressed by damages. This is not an
appropriate case for the award of an interlocutory
injunction.
Other matters raised about factors to be
weighed in the balance of convenience, that is, the
need to maintain the status quo, the significance
of a stronger case claimed by the applicant, while
they may require determination by the trial judge,
are irrelevant for my conclusion.
At the hearing of this matter counsel indicated
that the respondent had filed an undertaking and
was prepared to maintain an accounting of its
business until trial resolves the matter, in order to
have records available for assessment of damages
or an accounting of profits, if relief of that sort
were ultimately awarded to the applicant. The
order dismissing this application will direct that
the respondent do so in keeping with its
undertaking.
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.