Federal Court Decisions

     T-1340-97

BETWEEN:

             TELE-DIRECT (PUBLICATIONS) INC.

     Plaintiff

AND:

             CANADIAN BUSINESS ONLINE INC.

             - and -

             SHELDON KLIMCHUK

     Defendants

     ORDER AND REASONS THEREFOR

JOYAL, J.:

     The Plaintiff applies to the Court for an interlocutory injunction pursuant to Rule 469 of the Federal Court Rules. This motion arises out of an trade-mark infringement action. The motion was very ably and professionally argued by counsel for the parties, who submitted to the Court a mass of affidavits, exhibits and supporting argument. For purposes of the case, however, I will not respond specifically to anything which was said or noted in the course of the two-day hearing.

1.      Facts

     The Plaintiff company produces and distributes business and telephone directories in Canada. It also provides access to business listings on the Internet. It is the owner of the "Yellow Pages", "Pages Jaunes" and "Walking Fingers" (word and design) trade-marks in Canada. In its advertising, the Plaintiff has used the expression "Yellow Pages since 1948 and the "Walking Fingers" logo since 1975.

     The corporate Defendant, Canadian Business Online Inc., operates an internet site in association with electronic business directory services. On its internet site, the Defendant uses the expression "Canadian Yellow Pages on the Internet" alongside a representation of the Walking Fingers logo¹. The individual Defendant, Sheldon Klimchuk, is the sole director of Canadian Business Online, and according to the Plaintiff, its directing mind.

     On June 20, 1997, the Plaintiff filed a statement of claim wherein it alleged that the Defendants had infringed the Plaintiff's proprietary rights in its trade-marks by using them without proper authorization. In particular, the Plaintiff claims that:

(a)      the Defendants have made false and misleading statements tending to discredit the Plaintiff's business, contrary to s. 7(a) of the Trade-marks Act, R.S.C. 1985, c. T-13 (hereinafter "the Act");

(b)      the Respondent has created confusion in Canada between the Plaintiff's and the Defendants' wares, services and businesses, contrary to s.7(b) of the Act;

(c)      the Defendants have passed off their wares and services as those of the Plaintiff, contrary to s. 7(c) of the Act.

     As a result, the Plaintiff maintains that it has suffered irreparable harm in that the distinctive character of the trade-marks has diminished and the value of the goodwill attaching the trade-marks has diminished. Thus, the Plaintiff states that it is entitled to remedies provided for under s. 53.2 of the Act. It is also seeking the award of punitive and exemplary damages for the willful infringement of its proprietary rights and for the Defendants' unwillingness to resolve the matter.

     The Plaintiff applied for an interlocutory injunction pursuant to Rule 469 on June 20, 1997. A series of temporary injunctions were granted until the application came on for hearing on the merits, starting in Montreal on August 12, 1997, and continuing and concluding in Ottawa on September 8, 1997.

2.      Interlocutory Injunction

     The test for granting an interlocutory injunction is the same three-part test outlined in American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.), as revised from time to time by the Supreme Court of Canada:

(a)      the Plaintiff must demonstrate a serious question to be tried;

(b)      The Plaintiff must convince the Court that it will suffer irreparable harm if the relief is not granted;

(c)      the Court must consider whether the balance of convenience lies in favour of the granting or the refusing of the interlocutory injunction.

3.      The Case for the Plaintiff

     In support of its motion, the Plaintiff has filed the affidavits of Patrick F. Crawford dated June 20 and August 5, 1997.

     In these affidavits, lengthy evidence is presented on the history of the Plaintiff's trade-marks and their wide use throughout Canada. "Yellow Pages" and "Walking Fingers" are well-known in both official languages. The exposure to these marks is such that the public is compulsively identifying them with telephone business directories.

     The affidavit material goes on to explore the many intrusions by some people into the exclusive field of use of the marks enjoyed by the Plaintiff. This requires vigilance and, at times, cases of infringement on the Internet cannot be immediately discovered. Generally speaking, however, the Plaintiff has jealously guarded its property in this field and has been reasonably successful in putting a stop to unlawful use, thereby maintaining the pristine legitimacy and integrity of the marks.

     I might add here that for reasons which are not particularly well-known, the marks "Yellow Pages" or "Walking Fingers" and Design are not registered trade-marks in the United States. Recognizing the constant spillover of paper or electronic print into Canada, the Plaintiff is required to increase surveillance and wariness in order to keep its field of protection lean and clean.

     Further allegations in the Plaintiff's evidence deal with the doctrine or criteria of irreparable harm. In particular, loss of distinctiveness is not easily quantifiable and cannot be adequately compensated.

     Furthermore, the marks involved are licensed to a number of local, regional or provincial concerns. The Defendants' activities have seriously jeopardized the commercial value of such licensable property as well as the commercial relationship between the Plaintiff and its licensees and down the chain to the advertisers. In fact, by reason of medium of use, the conduct of the Defendants is an open invitation to others to encroach upon the Plaintiff's territory with seeming impunity.

     Finally, the Plaintiff stresses the fact that it has been in the business of telephone directories for many years. The conduct of the Defendants constitutes a blatant appropriation of someone else's property, with no resources available to satisfy any claim for damages.

4.      The Case for the Defendants

     The strongest case for the Defendants is that the trade-marks at issue are not trade-marks. Counsel argues that through a proliferation of the use of the trade-marks by the Plaintiff and its licensees, the words "Yellow Pages" and "Walking Fingers" and Design have become merely descriptive of business directories generally, In support, Defendants' counsel has filed over 700 pages of affidavits and exhibits showing the frequent uses of "Yellow Pages" for advertising solicitation in telephone directories.

     Furthermore, the Defendants argue that the impugned marks are being widely used in a "descriptive" context by the Plaintiff and its licensees themselves. Added to this are examples of "Yellow Pages" being used with no indication of its trade-mark character.

     As a result, conclude the Defendants, the Plaintiff has no assertible trade-mark rights against the Defendants because the trade-marks are not distinctive of the Plaintiff in Canada or elsewhere.

     Examples galore are set out in the exhibits of electronic origin, respecting the so-called "generic" use of the trade-marks. Many of these examples are from use by licensees of the Plaintiff, of which there are in excess of 15 throughout Canada and who are directly or indirectly involved in the providing of yellow pages telephone directory services to their clientele. Other examples are provided, again of electronic origin, but the very characteristics of the Internet make their origin, source, purpose and finally use in Canada and in the neighbouring U.S. somewhat ambiguous or unclear.

5.      Findings

     In my respectful view, the case has been made by the Plaintiff of the unlawful use in Canada by the Defendants of its trade-marks "Yellow Pages" and "Walking Fingers" and Design. This use is well established by the exhibits attached to the Plaintiff's affidavits. Furthermore, this Court can rely on admissions of use of the marks by the Defendants themselves, their real defence being the non-existence of the marks as "trade-marks" on grounds of descriptiveness and generic meaning.

     The Defendants obviously place a great reliance on the volume of yellow pages and walking fingers references found in the exhibits of electronic origin. Looking at this phenomenon in isolation, it would be easy to conclude that the marks have lost their distinctiveness in Canada and are no longer enjoying trade-mark status.

     With respect, I do not believe that such a conclusion may be made. Messages on the Internet are not the only mode of communication. Apart from trade-marks, words and phrases can be found in the whole field of electronic commerce, with attendant problems relating to certainty, predictability and permanency. Certain statutes now carry specific provisions relating to electronic transfer and records². In "Leading Issues in Electronic Commerce"³, Michael Erdle of Toronto sets out a series of these new dimensions requiring judicial and judicious attention.

     In that same issue, at p. 245, Robert M. Frank speaks at length of the travails of the International Trade-Marks Association, whose views on the open range of the Internet and intellectual property rights are set out as follows:

My views on the current Internet domain name crisis were sought. I replied that sooner or later, a case will go to trial over domain names conflicting with trade-marks. I anticipated that it will be decided that domain names are trade-marks. Once that case is closed, trade-mark owners will have to monitor domain names as they now monitor trade-marks and prosecute those who violate their trade-mark rights.

     It may perhaps be said that the case before me is already one in which, notwithstanding the peregrinations of the Internet in terms of its seamless borders and its obtrusive presence across whole continents, the basic principles of property ownership require continuing protection. In so doing, the current historical doctrines surrounding the concepts of use, of making known, of distinguishing, of acquiring or losing proprietary interests in trade-marks, may require jurisprudential and statutory revision. In the meantime, however, this Court should eschew making a Frigidaire case out of the one before me or making a finding of multiple third party use of the impugned marks when such use is in the United States. In that respect, I do not believe that this Court should rely on the case law⁴ submitted by the Defendants, where the context or the surrounding circumstances were radically different from the ones before me.

     Much was said, in argument by counsel for the Defendants, of the affidavit of Sheldon Klimchuk as well as the affidavits of staff of counsel for the Defendants which in volume, are meant to create a cumulative effect that the trade-marks involved have lost their distinctiveness. I am not satisfied, however, that the exhibits cited are evidence of third party use of the marks in Canada. They are mostly, in my respectful view, spillover from usage in the U.S., where the marks are not protected. That use of Canadian trade-marks abroad might have some evidentiary weight in some cases is not disputed. I should doubt, however, that it is very cogent when dealing with the alleged disappearing distinctiveness of a well-known trade-mark.

     With respect to the affidavit of Sheldon Klimchuk and the transcript of his cross-examination thereon, I regret not being able to draw many inferences in his favour. His answers on cross-examination are often at considerable variance with facts alleged in his affidavit. The company he formed a few months ago appears to be a paper company and its owner, as sole director, has provided no evidence of any activity under corporate status. Nor has he provided any tangible evidence by way of supporting documents, minutes, contracts, lists, bank accounts and the like which would reflect to any extent the financial stability and viability of his operation, or his ability to satisfy Court costs in the event the Plaintiff should be successful after trial. Admittedly, the inordinately stretched nature of his evidence might have little to do with the validity of the trade-marks before me, but it does suggest that there is an element of charade somewhere in his scenario.

6.      Conclusions

     It is my view that the case for the Plaintiff is strong. The evidence of unauthorized use knowingly made by the Defendants is pretty conclusive. Both sides of the issue were thoroughly canvassed by very able and persuasive counsel for the parties, and for that, I am duly thankful. Nevertheless, I am unable to endorse the Defendants' substantive strategy and the case for interlocutory relief for the Plaintiff becomes more convincing.

     In this respect, I should adopt the comments of my colleague Dubé J. in Tele-Direct (Publications) Inc. v. American Business Information Inc.⁵, where the allegations of infringement of the Plaintiff's trade-marks were substantially the same. Interlocutory relief was granted in that case and I see no reason why it should be refused in the case before me.

     O R D E R

     Unless sooner varied, amended or terminated on consent of the parties or otherwise, the interim injunction dated September 8, 1997, is hereby made interlocutory and is to remain in force until final disposition of the action.

     Costs in the cause.

    

     _________________________

     J U D G E

O T T A W A , Ontario

September 17, 1997.

__________________

¹      See Statement of Claim, para. 14.

²      See the Proceeds of Crime (Money Laundering) Act, R.S.C. 1991, c. 26; and the Bank Act, R.S.C. 1991, c. 46, ss. 440 et seq.

³      12 C.I.P.R. p. 252.

⁴      See N.W.L. Ltd. v. Woods, [1979] W.L.R. 1294 (H.L.); Caterpillar Inc. et al v. Chaussures Mario Moda Ltd., (1995) 62 C.P.R. (3d) 338; and Centre Ice Ltd. v. National Hockey League, (1994) 53 C.P.R. (3d) 34.

⁵      58 C.P.R. (3d) p. 10.