BETWEEN:
and
BAYERISHE MOTOREN WERKE AKTIENGESELLSCHAFT
Heard at Ottawa, Ontario, on March 15, 2007.
Order delivered at Ottawa, Ontario, on March 15, 2007.
REASONS FOR ORDER BY: SEXTON J.A.
Docket: A-3-07
Citation: 2007 FCA 111
Present: SEXTON J.A.
BETWEEN:
NISSAN CANADA INC.
Appellant
and
BMW CANADA INC.
BAYERISHE MOTOREN WERKE AKTIENGESELLSCHAFT
Respondents
REASONS FOR ORDER
[1] The Respondents in this appeal, BMW Canada Inc. and Bayerishe Motoren Werke Aktiengesellschaft (collectively, “BMW”), have requested reconsideration of the Order granted yesterday by which a stay was granted until disposition of the main motion for a stay is heard which the parties agree can take place next Thursday or Friday.
[2] By a judgment dated March 7, 2007, MacKay D.J. granted an injunction in favour of BMW as against Nissan Canada Inc. (“Nissan”) in the following terms:
4. The plaintiffs’ claims to injunctive relief and an order for delivery up, or destruction under oath, of materials that may offend the terms of the injunction granted, are allowed in the following terms:
a. The defendant is restrained henceforth, from the date of this Judgment, from acting, by the corporation, its officers, servants, agents, employees or others over whom it exercises control from
i. directing public attention to its wares in any way likely to cause confusion in Canada, including by using the trade-marks M and M6 in association with automobiles, parts and accessories, between the defendant’s wares and those of the plaintiffs contrary to paragraph 7(b) of the Act;
ii. advertising, promoting, offering for sale or selling automobiles, their parts and accessories in association with the trade-marks M and M6.
b. The defendant shall deliver up to the plaintiffs or destroy under oath all literature, invoices, packaging, signs, advertising, promotional or marketing material, printed matter, recorded matter, film or other material in its possession, care, custody or control as may offend the injunction, herein granted, in particular, materials that include the letter M or the symbol M6 as trade-marks.
5. The declaration, the injunction, and the order to deliver or destroy materials are effective this day, and counsel for the parties shall consult on any issues arising concerning implementation of those orders, with a right to make submissions to the Court on any issue about which counsel are unable to agree.
[3] By motion dated March 13, 2007, Nissan moved for a stay of the judgment pending the hearing of its appeal. Nissan also requested that an interim stay be granted until the main motion for a stay can be heard, a request which I granted by Order yesterday. Upon release of the Order, BMW requested reconsideration in accordance with Rule 397(1)(b) of the Federal Courts Rules. I agreed to reconsider the matter and the parties made oral submissions on the motion for reconsideration. However, only Nissan has filed written material and therefore I must dispose of the motion without the benefit of any written material from BMW. I do not fault counsel for BMW for the lack of material as I assume that he has had insufficient time to prepare it. Nevertheless the matter must be dealt with.
[4] Nissan has filed an affidavit containing evidence of the irreparable harm which will occur to Nissan in the event no stay is granted.
[5] Counsel for BMW has arranged to cross-examine on the affidavit filed by Nissan on Monday. Cross-examination cannot take place earlier because the affiant is in Japan.
[6] As mentioned, the parties have agreed that hearing on the main motion can take place next Thursday or Friday and the Court will accommodate this request.
[7] The irreparable harm which Nissan claims will ensue if no stay is granted is outlined in their material as follows:
As a result of the order of Justice MacKay, NCI will be required to immediately destroy all current inventory of 2007 Infiniti G35 brochures, 2007 Infiniti M brochures and 2007 Infiniti All Line Brochures.
Auto Shows are scheduled in the next two months as follows:
Quebec City – March 5 – March 11
Calgary – March 14 to March 19
Ottawa Auto Show – March 22 to March 25
Vancouver Auto Show – March 31 to April 8.
As a result of the judgment, NCI has pulled all potentially offending brochures, and had none to give out to potential consumers at the Quebec City auto show. The same will be true of the upcoming Calgary, Ottawa and Vancouver auto shows if a stay is not granted by this Court. NCI had planned to distribute approximately 25,000 brochures at the Quebec, Calgary and Vancouver auto shows.
It is impossible to have the new brochures printed in time for any of the March-April auto shows. It takes approximately 6 weeks to have new brochures designed and printed and will cost approximately $85,000.
The lack of brochures at an auto show is a serious problem. Potential customers attend auto shows and take brochures of vehicles they are interested in. Without brochures, NCI will lose contact with customers.
Having no brochures at an auto show will have a negative impact on Nissan’s customers and potential customers’ positive image of Nissan as a well run and organized company. The negative perception of Nissan will also result in a negative perception of Nissan and Infiniti’s products as being well made, dependable and reliable; and it will be impossible to determine the impact on Nissan’s sales.
In addition, NCI will be required to take the following action in order to comply with the order of Justice MacKay:
(1) disabling and revising the dealer Assist web site, that contains material (e.g. Service Manual) not distributed to the public but may be seen by owners or consumers, which may jeopardize the safety of Nissan’s customers; and
(2) disabling and revising the infiniti.ca web site;
(3) disabling and doing a complete review of all computer systems to remove references to M6 (short form for manual 6 speed transmission);
(4) destruction of any inventory held by NCI and discontinuing the use of third party Materials: Magazine Article Reprints;
(5) destruction of all Energuide material held by NCI and advising the government that NCI can no longer participate in the distribution of any material that contains M or M6 references;
(6) destruction and revising and reprinting materials not distributed to the public but may be seen by owners or consumers, such as Technical Service Bulletins, Service Manuals, Vehicle Product Ordering Guides (VPOG), Sales Consultant Manuals SCMs’, price lists for the Infiniti M and G vehicles, and price lists for its Nissan vehicles that have manual 6 speed transmissions (M6);
(7) delivering up or destroying invoices – records which the government requires NCI to maintain
The operation and effect of Justice MacKay’s order is far reaching to include vehicles that were not the subject of the litigation and references to M6 in the context of bolts to repair vehicles.
In order to carry out these actions, NCI will have to shut down its web site, pull brochures from auto shows, pull documents from its public websites and private databases, such as service information. The overall message to the public will be that Nissan/Infiniti is in some type of trouble that has resulted in disorganization and inability to serve customers. In a highly competitive market place, this type of message will harm Nissan’s reputation and its brands and it will never be able to determine what the long term effect (lost sales, lost revenues, lost customer base) will be.
Maintaining the status quo would permit NCI to continue to market its M35 and M45 vehicles in the manner it has done since their introduction.
[8] I am satisfied, on this evidence, that Nisaan would suffer irreparable harm if no stay is granted.
[9] By Order dated December 16, 2005, von Finckenstein J. refused to grant an interlocutory injunction sought by BMW, finding that BMW had failed to establish irreparable harm. In answer to a question put by me to counsel for BMW on this hearing as to whether BMW would suffer any irreparable harm if an interim stay is in place until the main motion for a stay is heard next week as planned, counsel for BMW responded in the negative.
[10] On the issue of balance of convenience, it is clear Nissan will suffer greater harm from a stay being refused than BMW will suffer if a stay is granted. Nissan will have to take many steps to implement the judgment of MacKay D.J., whereas BMW will simply have to maintain the status quo which has existed since approximately 2005. It has its remedy in damages awarded by MacKay D.J.
[11] In my view, Nissan has established that there is a serious question to be tried. The threshold to be met on this issue is low, as described by Sharlow J.A. in Apotex Inc. v. Sanofi-Aventis Canada Inc. et al., 2007 FCA 7 at paragraph 26:
The first test generally is considered to represent a very low bar, with the result that it is not usually necessary or desirable to consider the grounds of appeal in any depth. At the same time, I cannot help but note that there are strong grounds of appeal in this case.
[12] It is arguable that the decision of MacKay D.J. to allow the claim for passing off is inconsistent with his finding regarding the evidence and his dismissal of BMW’s claim regarding trade-mark infringement and depreciation goodwill.
[13] It is also arguable that the trial judge’s finding that BMW had established goodwill in the use of the letter M alone in advertisements of its cars is inconsistent with his finding that the letter M is also used to designate models by a number of other auto manufacturers:
Mr. Duval however, provides some evidence of numerous other automobile manufacturers that use the letter M, in corporate logos, (i.e., Mazda, Mercury, Maybach all use stylized M’s in registered trade-mark logos). Others use the letter M, in conjunction with other letters or numbers in reference to particular classes or models of their vehicles (e.g. Chrysler, Ferrari, Acura, Mazda and Mercedes-Benz). The letter M is also used with numbers or letters in trim designations on many vehicles, and in some of those combinations it is a symbol that the vehicle so marked has a manual transmission. In short the letter M is used to designate models, or particular trimmed vehicles, by a number of auto-manufacturers. (Reasons of MacKay J. at paragraph 32)
[14] In my view, if Nissan has to take all the actions specified by MacKay D.J. immediately, this may well make much of the relief sought by Nissan on the motion moot. In view of the fact that this matter is to be heard in the very near future, therefore, an interim stay is appropriate.
[15] For these reasons, I decline to change the Order granted on the 14th of March, 2007.
[16] No one has asked for costs and none shall be granted.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-3-07
STYLE OF CAUSE: Nissan Canada Inc. v. BMW Canada Inc. et al
MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES
REASONS FOR ORDER BY: SEXTON J.A.
WRITTEN REPRESENTATIONS BY:
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Mr. Warren Sprigings
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FOR THE APPELLANT
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FOR THE RESPONDENTS
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SOLICITORS OF RECORD:
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Toronto, Ontario
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FOR THE APPELLANT
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FOR THE RESPONDENTS
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