Date: 20050809
Docket: A-143-04
Citation: 2005 FCA 269
CORAM: LINDEN J.A.
ROTHSTEIN J.A.
BETWEEN:
ALTICOR INC. and
QUIXTAR CANADA CORPORATION
Appellant
(Plaintiffs)
and
NUTRAVITE PHARMACEUTICALS INC.
Respondent
(Defendant)
Heard at Ottawa, Ontario, on June 8, 2005.
Judgment delivered at Ottawa, Ontario, on August 9, 2005.
REASONS FOR JUDGMENT BY: LINDEN J.A.
CONCURRED IN BY: ROTHSTEIN J.A.
SHARLOW J.A.
Date: 20050809
Docket: A-143-04
Citation: 2005 FCA 269
CORAM: LINDEN J.A.
ROTHSTEIN J.A.
SHARLOW J.A.
BETWEEN:
ALTICOR INC. and
QUIXTAR CANADA CORPORATION
Appellant
(Plaintiffs)
and
NUTRAVITE PHARMACEUTICALS INC.
Respondent
(Defendant)
REASONS FOR JUDGMENT
[1] This is an appeal from the decision of the Trial Division dated February 16, 2004 dismissing Alticor Inc. and Quixtar Canada Corporation's infringement action pursuant to subsection 20(1) of the Trade-marks Act, R.S. 1985, c. T-13 (the "Act") against Nutravite Pharmaceuticals Inc. The question for this Court is whether the Trial Judge erred in the conclusion reached so as to require this Court to intervene. Although the intricate and detailed attack on the trial decision exposed some minor errors, mainly having to do with imprecise language, I am of the view that the appeal must be dismissed. (The Trial Judge also dismissed a counterclaim brought by Nutravite that alleged Alticor's trademark was not valid, but the invalidity claim has not been appealed. Moreover, the passing-off claim, which was also dismissed, was not pressed on appeal by counsel for the appellants, although it was mentioned in the factum.)
FACTS
[2] NUTRILITE is the registered trade-mark owned by Alticor for use in association with their line of vitamin and mineral food supplements. Quixtar is the exclusive distributor of NUTRILITE products in Canada. Quixtar uses a multi-level marketing program for distribution. That is, with limited exceptions, Independent Business Owners facilitate the sale of Alticor's products to consumers directly, not in stores.
[3] NUTRAVITE is the unregistered trademark used by Nutravite Pharmaceuticals in association with its vitamin, mineral and herbal products. NUTRAVITE products are sold exclusively in retail outlets in Alberta, Manitoba, British Columbia and Ontario such as Shoppers Drug Mart, Pharmaplus, Wal-Mart and Giant Tiger stores. They do not use a distribution structure like that of Quixtar, involving direct sales through Independent Business Owners.
[4] Alticor successfully opposed the registration of the NUTRAVITE trademark in a proceeding before the Trade-marks Opposition Board in 1998, contending that it was likely to be confusing with their registered trademark, NUTRILITE. An appeal to the Federal Court of that decision was discontinued for reasons unrelated to these proceedings. However, Nutravite Pharmaceuticals, despite having lost the registration case, continues to use their disputed mark in their marketing program.
[5] Alticor commenced this action in August 1999, for both trademark infringement and passing off, arguing that there is a likelihood of confusion between its trademark NUTRILITE and the defendant's NUTRAVITE mark.
[6] After eight days of trial, which produced 31 volumes of evidence, the Trial Judge in a detailed and lengthy decision, dismissed both claims, finding that there was no reasonable likelihood of confusion between the trademarks at issue. The Trial Judge first considered the material date at which to determine whether there is a reasonable likelihood of confusion. The Trial Judge then, as required, considered the five factors set out in subsection 6(5) of the Act, as well as several additional surrounding circumstances including: a) the Opposition Board Decision; b) use of "NUTR"; c) co-existence of trademarks and survey evidence; d) acquiescence to the use of the trademark; and e) the plaintiff's position in the retail market. In the end, the action was dismissed with costs. Hence this appeal.
ISSUES
[7] Several issues, both legal and factual, were raised by appellants' counsel in a most thorough critique of the trial decision. Several of these issues will be discussed in detail, but others will be examined more summarily. The two main issues as identified by counsel are:
1. Did the Trial Judge err in law in finding that the material date for considering infringement of this registered trademark was the date of the trial?
2. Did the Trial Judge err in fact and law in holding that, in all of the circumstances of the case, there was no likelihood of confusion between the trademark NUTRAVITE and the trademark NUTRILITE?
ANALYSIS
[8] Both parties agree that the standard of review, as articulated in Housen v. Nikolaisen (2002), 211 D.L.R. (4th) 577 (S.C.C.) is applicable to the present case. That is, for questions of law, the standard is correctness. For questions of mixed fact and law it is palpable and overriding error, unless a distinct error of law can be extricated from the question, in which case correctness would again be the standard on that specific question.
Issue 1
Material Date for Considering Infringement of a Registered Trademark
[9] Both parties agree that the first issue is a question of law and is reviewable on a standard of correctness.
[10] Despite the able arguments of counsel for the appellants, I agree with the Trial Judge's finding that the relevant date in this case is the date of the trial hearing.
[11] There is now substantial jurisprudence suggesting that the material date for determining likelihood of confusion for purposes of opposition proceedings and determinations under paragraph 12(1)(d) of the Act is the hearing date (see for example Park Avenue Furniture Corp. v. Wickes/Simmons Bedding Ltd. (1991), 37 C.P.R. (3d) 413 (F.C.A.) and Oshawa Group Ltd. v. Creative Resources Co. Ltd, (1982) 61 C.P.R. (2d) 29 (F.C.A.)). However, the material date for assessing confusion in actions for infringement under section 20 has not yet been finally settled. (Gill and Joliffe, Fox on Canadian Law of Trade-marks and Unfair Competition, 4th ed., looseleaf 2002; Thomson Carswell: Toronto).
[12] In my view, for reasons of consistency and practicality, the material date for determining confusion should normally be the date of the hearing, although exceptions may exist. This would be in harmony with the jurisprudence dealing with opposition proceedings.
[13] In this case, counsel for the appellants carefully referred to certain delicate hints in various provisions in the Act, which, it was suggested, required that the Court assess confusion not at the hearing date but rather at the date when the Respondent's mark first entered the market. However, the Appellants did not point us to any specific direction in the Act, nor to any special considerations that would warrant assessing confusion at that date.
[14] One reason why the relevant date must normally be the hearing date is that this would ensure that the Court would have available to it all relevant evidence of surrounding circumstances that might become available between the time of first use and the hearing date. (See Cartier Inc. v. Cartier Optical Ltd. (1988), 20 C.P.R. (3d) 68 (F.C.T.D.); Monsport Inc. v. Les Vetements de Sport Bonnie, (1978) Ltée. (1988), 22 C.P.R. (3d) 356 (F.C.T.D.).)
[15] Where, as here, a permanent injunction is sought, the relevant date must also be the hearing date. Whether confusion existed at a previous time is not determinative of whether an injunction should, at the time of the hearing, be granted. It is clear that the Court in such a situation must assess confusion at the time of the hearing.
[16] There is, however, no unwavering rule as to material date. There will be cases where another date or dates may be more appropriate, depending on the facts of the case and the remedies being sought. Obviously, such a situation might exist where a party alleges that infringement both began and ceased at some time prior to trial. There is no fixed time for confusion to be established; rather the usual situation is to demonstrate confusion over a period of time, for that is what generates the damages. Thus, it is plain that the material date, though normally the time of the hearing, may vary depending on the specific facts and pleadings of each case.
Issue 2
Likelihood of Confusion
[17] The second issue, whether there is a likelihood of confusion between the two trademarks, is a question of mixed fact and law. However the appellants contend that there are particular legal errors that can be extricated from the question that must be reviewed on a standard of correctness. These legal errors, it is suggested, are:
a) the Trial Judge incorrectly applied the test of product confusion instead of source confusion;
b) the Trial Judge failed to consider likelihood of confusion as a matter of first impression to a consumer generally;
c) the Trial Judge failed to compare the trademarks with one another;
d) the Trial Judge failed to consider factors separately;
e) the Trial Judge failed to consider the likelihood of confusion if the appellants were to operate in the future in any way open to them, including through retail channels; and
f) the Trial Judge failed to give effect to the decision of the Opposition Board.
[18] The respondent submits that no errors of law can be extricated from the question of likelihood of confusion as the appellants suggest. Nutravite Pharmaceuticals addresses the alleged errors and contends that the Trial Judge did not make any legal errors, but reached the decision based predominantly on the facts of the case without making any palpable and overriding error.
[19] The statutory provisions relevant to this case are:
|
6.(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.
(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. |
6.(2) L'emploi d'une marque de commerce crée de la confusion avec une autre marque de commerce lorsque l'emploi des deux marques de commerce dans la même région serait susceptible de faire conclure que les marchandises liées à ces marques de commerce sont fabriquées, vendues, données à bail ou louées, ou que les services liés à ces marques sont loués ou exécutés, par la même personne, que ces marchandises ou ces services soient ou non de la même catégorie générale.
(5) En décidant si des marques de commerce ou des noms commerciaux créent de la confusion, le tribunal ou le registraire, selon le cas, tient compte de toutes les circonstances de l'espèce, y compris_: a) le caractère distinctif inhérent des marques de commerce ou noms commerciaux, et la mesure dans laquelle ils sont devenus connus; b) la période pendant laquelle les marques de commerce ou noms commerciaux ont été en usage; c) le genre de marchandises, services ou entreprises; d) la nature du commerce; e) le degré de ressemblance entre les marques de commerce ou les noms commerciaux dans la présentation ou le son, ou dans les idées qu'ils suggèrent. |
Was the Wrong Test of Confusion Used by the Trial Judge?
[20] Counsel for the appellants contend that the Trial Judge used the wrong legal test of a "hypothetical consumer out to buy a bottle of the Plaintiff's vitamins" to assess whether there was confusion. This, it is contended, is a legal error. I do not agree. While the Trial Judge, with insufficient precision perhaps, did use this language in paragraph 39 of the reasons, it was merely an example offered in the context of evaluating one of the factors, nature of the wares, listed in paragraph 6(5)(e) of the Act, and was not by itself a legal error that would merit intervention.
[21] Earlier in the reasons, (paragraph 18) the Trial Judge indicated a proper understanding of the "overarching principle", and correctly cited the legal test as outlined by this Court in Polo Ralph Lauren Corp. v. United States Polo Association (2000), 9 C.P.R. (4th) 51 at paragraph 3 which is:
...whether, as a matter of first impression in the mind of an average consumer having a vague or imperfect recollection of another mark, the use of both trade-marks in the same area and in the same manner is likely to lead to the inference that wares associated with those marks are produced or marketed by the same company.
[22] In addition, the Trial Judge properly concluded the analysis of confusion using the appropriate test as follows:
As indicated earlier, the factors in subsection 6(5) of the Act need not be attributed equal weight. In my view, the factor that warrants the greatest emphasis in this case is the nature of the trade. Combining this factor with the surrounding circumstances of the presence of a commonly-used prefix, NUTRI, at the beginning of the trade-mark and co-existence of the two trade-marks for over ten years without confusion, leads to the conclusion that the Plaintiffs have not discharged their burden of showing a likelihood of confusion between the two trademarks. In other words, an average consumer having a vague or imperfect recollection of the NUTRILITE trade-mark upon encountering a NUTRAVITE product, would not infer that the NUTRAVITE product is associated with NUTRILITE brand products.
Having had regard to all of the surrounding circumstances including those enumerated in subsection 6(5) of the Act, I find that use of the NUTRAVITE trade-mark is not likely to lead to the inference that NUTRAVITE products and NUTRILITE products are sold by the same person. Accordingly, NUTRAVITE is not a confusing trade-mark and there has been no infringement of the NUTRILITE trade-mark.
[23] The Trial Judge clearly understood that it is not any member of the public who must be confused about the source of the competing products, but dealers or potential or actual users of the type of wares in question. (See British Drug Houses v. Battle Pharmaceuticals (1944), C.P.R. 48 (Ex. Ct.) per Thorson J. at p. 51.) It was understood by the Trial Judge that it is average consumers of the wares that must be considered (see United Artists Corporation v. Pink Panther Beauty Corp. (1998), 80 C.P.R. (3d) 247 (F.C.A.) at p. 255), not any disinterested passerby.
[24] The Trial Judge rightly indicated that a Judge must put himself or herself in the "position of an average consumer who has some recollection of the [...] mark...when encountering the [offending] product, in order to see if they would infer that the ... product is somehow associated with the other wares", (see para. 18(ii)).
[25] Moreover, it has been said that this determination of confusion is essentially a question of fact. (Benson and Hedges v. St. Regis Tobacco, [1969] S.C.R. 192, at p. 199; see Isaac C.J. in Polo, supra at p. 66; British Drug Houses, supra at p. 53, per Thorson J.; Hughes, Trademarks (2d ed. looseleaf at p. 69). Consequently, considerable deference must be accorded to trial judges in their determinations about confusion. Remember, although certainly not required, there was no evidence of any actual confusion presented in this case.
[26] On the whole, in my view the Trial Judge evinced an understanding of the correct legal test and applied it rationally to the facts as found.
Was There Legal Error Concerning the Source of the Wares?
[27] Another key argument of counsel for the appellants was that the Trial Judge wrongly considered a test involving confusion about the products, rather than the source of the products being purchased.
[28] While the Trial Judge in this case may have tended to emphasize the confusion in relation to the products, there was, on balance, no legal error evinced in the circumstances of this case. It was a case involving similar products with similar trade marks. It was obvious that, if they caused confusion to the average consumer, it would inevitably be confusion in relation to a common source. It was not the type of case involving different types of products using similar marks, such as a Ford cigarette or a Camel automobile, where the court would have to expressly focus on the confusion about the source of the products using the similar marks. (See also, United Artists v. Pink Panther Beauty Corporation (1998), 80 C.P.R. 264 (F.C.A.). While the Trial Judge did not consistently focus on the source of the goods, I am not persuaded that there was any legal error in this aspect of the analysis in the circumstances of this case.
The Treatment of the Decision of the Trade-marks Opposition Board
[29] The appellants contend that the decision of the Opposition Board, refusing to register the NUTRAVITE trademark, should have been given more weight by the Trial Judge in the reasons. The Board decision was appealed, but later withdrawn. It cannot have been the intention of Parliament, it is argued, to allow the respondent to continue using a mark found to be confusing by the Board.
[30] The Trial Judge was not bound by the Opposition Board decision. The trial Court did consider the Board's decision and the weight, if any, it should receive as a surrounding circumstance in the overall decision about confusion. Noting the different burden on the parties, the different evidence and the different legal issue involved, the Court concluded with the following analysis:
However, I believe that the Opposition Board's final determination should be accorded little weight. The Opposition Board, although applying the same provisions of subsection 6(5) of the Act regarding confusion, had before it a different record and was making a different determination with a different burden of proof. The decision cannot, in my view, be relied on in these proceedings. Further, I am not in a position to review that tribunal's decision. My task in this action is to make my findings and reach my conclusions on the basis of the evidence before me and on my analysis of the applicable law. Accordingly, even though the parties and the issue of confusion are the same as before me in this case, I do not intend to defer to the Opposition Board in reaching my own conclusions in this case.
[31] I am unable to discern any error in this analysis that would require our intervention. The legal system is not a stranger to different outcomes arising out of the same factual situation where different issues are at stake and different evidence is introduced.
Other Issues
[32] Having considered the main legal imperfections that have been alleged, I shall now briefly refer to some of the primarily factual critiques that have been made by counsel for the appellants.
[33] As outlined above, the Trial Judge, despite some trivial verbal imperfections, employed the proper overall test of confusion, analysed each of the factors set out in subsection 6(5) of the Act, and weighed several surrounding circumstances as required. Several of the factors were found to favour the appellants, others the respondents.
[34] Despite the intricate arguments of counsel, I can see no palpable and overriding errors in any of this analysis, concerning the factors that favoured the respondent, which would warrant our interference. There are many examples of alleged errors. Under paragraph 6(5)(a), for example, it was argued that the phrase "inherent distinctiveness" was not properly understood and was wrongly employed without paying sufficient attention to the adjective 'inherent'. The Trial Judge, it is said, concluded wrongly, that the mark was not "inherently distinctive", by relying on a so-called "acknowledgement" of one of the witnesses, who, in actuality, said only that the mark was "not particularly distinctive". It is also argued that the Trial Judge wrongly used the phrase "well-known" instead of the unadorned word "known", as required in paragraph 6(5)(a) of the Act. In my view, no new standard or test was adopted by the Trial Judge when the phrase well-known was used. All that was meant was that the product had not become known to any great extent. Another criticism is that the knowledge about the two products in the market should have been compared, not merely the knowledge of the appellants' mark. There were other similar points made. I am not persuaded that any of these points, which seem to be mainly linguistic, criticising the paraphrasing of the Trial Judge, amount to sufficient error to warrant appellate intrusion. We do not normally examine reasons microscopically.
[35] One of the primary factors in the analysis of the Trial Judge was the nature of the trade, pursuant to paragraph 6(5)(d). Several factual errors, particularly concerning some overlapping of distribution methods, were complained of by appellants' counsel, but none of them amounted to overriding and palpable errors. The voluminous record contained material upon which the Trial Judge was permitted to find that the channels of trade of these two products were fundamentally different, so that the "nature of the trade of NUTRALITE products is materially different from that of NUTRAVITE products" (paragraph 49). The Court concluded that "the possibility of confusion is remote". I cannot see any error warranting interference in this overall conclusion on all of the evidence.
[36] The appellants' argument based on the passage contained in Mr. Submarine Ltd. v. Amandista Investments Ltd. (1987), 19 C.P.R. (3d) 3 at 12 (F.C.A.) is also unpersuasive. In that case, the Court stated:
Whether the respondent's trade marks or trade names are confusing with the appellant's registered trade mark must accordingly be considered not only having regard to the appellant's present business in the area of the respondent's operations but having regard as well to whether confusion would be likely if the appellant were to operate in that area in any way open to it using its trade mark in association with the sandwiches or services sold or provided in the operation.
The key phrase relied on by appellants' counsel was potential operations "in any way open to it", It was argued that any possible methods of distribution potentially available at any time in the future should be protected. This is not a legitimate reading of the phrase relied on, in my view.
[37] The Trial Judge correctly held that, on the evidence in this case, any significant move into retail by the appellants in this case was "purely speculative". There was no business plan to alter their sales methodology. The corporate witnesses offered no evidence concerning any impending shift in sales strategy. In fact, one witness stated there is "absolutely no way on the face of the earth" that NUTRILITE would be sold at retail outlets. Hence, any argument based on statements about possible future developments was hypothetical and had no substance. It has been held that assessing the future sales operations of a company should not include speculation about possible new ventures. (See Joseph E. Seagram & Sons Ltd. v. Registrar of Trade Marks (1990), 33 C.P.R. 454, at p. 46, (F.C.T.D.); Cochrane-Dunlop Hardware Ltd. v. Capital Diversified Industries Ltd. (1976), 30 C.P.R. (2d), 176 at p. 188 (Ont. C.A.). The actual channels of trade are a preferable basis of projections as to the future likelihood of confusion. (See Man and His Home Ltd. v. Mansoor Electronics Ltd. (1999), 87 C.P.R. (3d) 218 at p. 226; affd. 9 C.P.R. (4th) 68 (F.C.A.).) On these matters, also, I can see no reversible error.
[38] As for the surrounding circumstances, the Trial Judge considered all the potential surrounding circumstances and properly considered them, along with the legislatively mandated factors. The Trial Judge came to a conclusion, in accordance with the evidence and consistent with the statute and the overriding principles that apply. I cannot see any basis for overturning that decision.
CONCLUSION
[39] In my opinion this appeal should be dismissed with costs to the respondent.
"A.M. Linden"
J.A.
"I agree
Marshall Rothstein J.A."
"I agree
K. Sharlow J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-143-04
STYLE OF CAUSE: ALTICOR INC. ET AL v. NUTRAVITE PHARMACEUTICALS INC.
APPEAL FROM AN ORDER OF SNIDER, J. DATED FEBRUARY 16, 2004, FILE NO. T-1489-99
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: JUNE 8, 2005
REASONS FOR JUDGMENT OF THE COURT: LINDEN J.A.
CONCURRED IN BY: ROTHSTEIN J.A.
SHARLOW J.A.
DATED: AUGUST 9, 2005
APPEARANCES:
Ms. Diane E. Cornish FOR THE APPELLANTS
Ms. Andrea Slain
Mr. Marcus Gallie FOR THE RESPONDENT
Ms. Lisa Reynolds
SOLICITORS OF RECORD:
Osler, Hoskin & Harcourt LLP FOR THE APPELLANTS
Ottawa, Ontario
Ridout & Maybee LLP FOR THE RESPONDENT
Ottawa, Ontario