Date: 20021112
Docket: A-2-02
Neutral citation: 2002 FCA 446
CORAM: STRAYER J.A.
BETWEEN:
FARSIDE CLOTHING LTD. and
FARSIDE SKATEBOARDS
& SNOWBOARDS LTD.
Appellants
and
CARICLINE VENTURES LTD.
Respondent
Heard at Vancouver, British Columbia, on November 12, 2002.
Judgment delivered from the Bench at Vancouver, British Columbia, on November 12, 2002.
REASONS FOR JUDGMENT OF THE COURT BY: EVANS J.A.
CONCURRED IN BY: STRAYER, NADON JJ.A.
Date: 20021112
Docket: A-2-02
Neutral citation: 2002 FCA 446
CORAM: STRAYER J.A.
BETWEEN:
FARSIDE CLOTHING LTD. and
FARSIDE SKATEBOARDS
& SNOWBOARDS LTD.
Appellants
and
CARICLINE VENTURES LTD.
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Vancouver, British Columbia
on November 12, 2002.)
EVANS J.A.
A. INTRODUCTION
[2] Caricline issued two statements of claim alleging the infringement of its PHARSYDE mark by the defendants. The defendants in the first action are ZZTY Holdings Limited and Azim Zone Inc. which operated clothing stores in Toronto in association with the words "Farside Clothing Co.". The defendants in the second action, Farside Clothing Ltd. and Farside Skateboards & Snowboards Ltd., operate retail stores in Edmonton selling clothing and sports goods under and in association with the mark, FARSIDE. Each of the defendant companies is owned by a member of the Devji family.
[3] The defendants alleged that the plaintiff's registered trade mark, PHARSYDE, was invalid and counterclaimed for its expungement. The two actions were heard together, and a single set of reasons was rendered. The Trial Judge, O'Keefe J., held that the plaintiff's mark was valid and dismissed the counterclaim, and found for the plaintiff in its infringement action: Caricline Ventures Ltd. v. ZZTY Holdings Limited and Azim Zone Inc., 2001 FCT 1342. The defendants, to whom we shall now refer as the appellants, have appealed from this judgment.
[4] The appellants submit that the Judge erred in finding that they had not proved that the respondent's registered trade mark was invalid, either under section 17 of the Trade-marks Act, R.S.C. 1985, c. T-13, by virtue of its prior use by the appellants, or under section 18, because it had ceased to be distinctive by September 1997 when the appellants filed their counterclaim challenging the mark's validity.
[5] Without abandoning the prior use argument, counsel focussed almost her entire oral submissions on the issue of distinctiveness. We consider this issue on its merits first, without deciding whether the Judge was correct to conclude that the appellants had not properly pleaded it in their statement of defence.
B. DISTINCTIVENESS
[6] The appellants' theory of this aspect of the case is that their use of the FARSIDE mark between June 1995 and September 1997 in connection with wares that are similar to those associated with the PHARSYDE mark caused the respondent's mark to lose whatever distinctiveness it may have had when the respondent applied for the mark in April 1995. Counsel's argument was that O'Keefe J. erred in law by treating the appellants' use of the mark, FARSIDE, in connection with their wares as irrelevant because it was an infringing use.
[7] She supported this argument with two submissions. First, it is not the law that a mark's distinctiveness may not be disproved by evidence of prior infringing use by the person challenging it. Second, the appellants' use of their FARSIDE mark before the respondent's mark was registered in January 1997 was not infringing: the respondent had applied for a proposed trade mark. The appellants were not relying on their conduct after they had learned of the PHARSYDE mark as a result of a cease and desist letter sent to them later in January, very soon after the mark was registered.
[8] We are not persuaded that the Judge failed to apply the correct legal test. The sentence in the reasons on which counsel heavily relies does not support her contention. O'Keefe J. said (at para 74): "In relation to the plaintiffs' mark, the only infringement or dilution alleged was by the defendants." This statement is true. However, counsel argues that it means that infringing use does not count for the purpose of section 17, which, as a legal proposition, is wrong.
[9] We do not agree with this construction of what the Judge said. He did not say that such use was irrelevant to a loss of distinctiveness. Indeed, the passages that he had quoted from Fox, The Canadian Law of Trade Marks and Unfair Competition, 3rd ed. (Toronto: Carswell; 1972), make it clear that infringing prior use may cause a mark to lose its distinctiveness, although how much will be sufficient to have this effect has been found to be a difficult question. It is one of degree.
[10] Nor are we persuaded that the Judge in fact only had in mind infringing prior use. His reference to "infringement or dilution" would suggest that he was aware that not all the prior use by the appellants was infringing
[11] Counsel also argued that, even if the Judge had applied the correct test, his finding that the respondent's mark was distinctive was clearly wrong, because the owner of the respondent gave evidence of actual confusion about whether the respondent's and appellants' stores were connected. In particular, he said that approximately two people a month raised this question. The questions came mainly from suppliers, and others connected with the trade, although he also recalled that a customer asked as well.
[12] The Judge relied on what he characterised as an extensive advertising campaign conducted in the Vancouver area by the respondent from 1996 to 1998 as evidence of efforts to secure the distinctiveness of PHARSYDE, as well as on the recognition of the store in a community newspaper and favourable reviews in two major newspapers. Again, in our view it cannot be said that the Judge's conclusion on the evidence before him was so clearly erroneous as to amount to an overriding and palpable error. The evidence of actual confusion was not so powerful as to make O'Keefe J.'s finding of distinctiveness unreasonable. That is, it was open to him to conclude on the evidence as a whole that the appellants had failed to prove that it was not reasonably likely that consumers would identify PHARSYDE with a single source.
C. PRIOR USE
(i) standing of the appellants to challenge the respondent's mark
[13] An application under section 17 of the Act for the expungement of a trade mark, on the ground of another's prior use or confusion with another mark, can only be made by the applicant for that other mark or a successor in title to it. When an application was made in 1998 for the registration of the mark, FARSIDE, the applicant was not one of the appellants, but a numbered company that operated under the name of Déja Vu. Mr. Hafis Devji owned this company, as well as Farside Clothing Ltd. Therefore, in order to establish standing to counterclaim for the expungement of the PHARSYDE mark, the appellants had to establish that the numbered company had transferred the FARSIDE mark to them.
[14] It was conceded that there was no written transfer of the mark from the numbered company to Farside Clothing. Mr. Devji admitted that the mark had not been sold by his numbered company to Farside Clothing, because he did not make a distinction in his own mind
between the two companies. Moreover, in October 1998, Mr. Devji noted that the mark applied for was FAR SIDE and amended the application to FARSIDE. However, he did not also seek to change the application to show the name of the applicant as Farside Clothing, rather than the numbered company.
[15] In our opinion, this was sufficient evidence for the Judge to find that the appellants had not proved that the mark had been transferred to Farside Clothing. That he did not expressly consider whether a transfer could be implied on the basis of evidence given by Hafis Devji, described by the Judge (at para. 42) as "uncertain" and "provided from memory", does not amount to palpable and overriding error that warrants the intervention of this Court.
(ii) prior use
[16] In order to succeed in a proceeding to expunge a mark under section 17 of the Trade-Marks Act, an applicant must show previous use of a confusing mark. A trade mark is deemed to have been used in connection with wares if, among other things, the mark is on the wares at the time that property in the wares is transferred, "in the normal course of trade."
[17] In addition to finding that there had been no prior use by the appellants, the Judge also rejected the appellants' section 17 argument because they had failed to prove that the FARSIDE mark was used as a trade mark to distinguish their wares, rather than as a design feature, or that, if it was a trade mark, PHARSYDE was confusing with it. However, in view of our conclusion on prior use, it is unnecessary for us to address these other issues.
[18] The prior use by the defendants of the FARSIDE mark had to have occurred before April 4, 1995, the date when the respondent filed for the registration of the mark PHARSYDE. Since Farside Clothing did not operate a store until June 1995, there was no previous use of the respondent's mark in connection with services. The only relevant prior use of the mark, therefore, could have been in association with wares
[19] The Judge found no evidence of any retail sales of wares with the FARSIDE mark. He was not prepared to infer from the evidence of the transfer of clothing with the FARSIDE mark from the Déja Vu and Glasshead stores to the Farside stores that the Farside stores had actually made sales of the clothing to the public. He noted that officers of the appellants had testified that such sales had occurred but, in the absence of any documentary evidence of actual sales of wares with the FARSIDE mark (such as sales figures or invoices), he did not regard their testimony as sufficient to discharge the appellants' burden of proof.
[20] In the final analysis, counsel's objection was that the Judge erred by "ignoring" the oral testimony of the appellants' officers, who both asserted that sales had been made and explained why the sales invoices did not show either the existence or volume of sales of wares with the FARSIDE mark. In our view, counsel was in effect simply asking us to attach more weight to the oral testimony than the Judge obviously did and to draw an inference from the sale of the wares to the Farside stores that the Judge did not. As the Supreme Court has made abundantly clear in Housen v. Nikolaisen, 2002 SCC 33, this is not the province of an appellate court, once it is satisfied, as we are, that the finding of fact made by the Judge was reasonably open to him on the evidence before him.
D. CONCLUSION
[21] For these reasons, the appeal will be dismissed with costs.
(Sgd.) "John M. Evans"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-2-02
STYLE OF CAUSE: Farside Clothing Ltd. et al. v. Caricline Ventures Ltd.
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: November 12, 2002
REASONS FOR JUDGMENT: EVANS J.A.
CONCURRED IN BY: STRAYER J.A.
NADON J.A.
DATED: November 12, 2002
APPEARANCES:
Ms. Carmen Plante FOR THE APPELLANT
Mr. Keith Mitchell
Mr. Kevin Wright FOR THE RESPONDENT
SOLICITORS OF RECORD:
Bishop & McKenzie LLP
Edmonton, Alberta FOR THE APPELLANT
Davis & Company
Vancouver, British Columbia FOR THE RESPONDENT