BETWEEN:
and
BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT
Heard at Toronto, Ontario, on March 22, 2007.
Order delivered at Toronto, Ontario, on March 22, 2007.
REASONS FOR ORDER BY: SEXTON J.A.
Docket: A-3-07
Citation: 2007 FCA 119
Present: SEXTON J.A.
BETWEEN:
NISSAN CANADA INC.
Appellant/Moving Party
and
BMW CANADA INC.
BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT
Respondents
REASONS FOR ORDER
[1] Nissan Canada Inc. (“Nissan”) moves for a stay of the Judgment and Order of Justice MacKay of the Federal Court dated March 7, 2007 pending disposition of an appeal of his decision by this Court. I granted an interim stay on March 15, 2007 pending the disposition of this motion.
[2] In the Federal Court, BMW Canada Inc. and Bayerische Motoren Werke Aktiengesellschaft (collectively, “BMW”) alleged that Nissan was liable for infringement and depreciation of goodwill in respect to certain trade-marks registered by BMW, contrary to sections 20 and 22 of the Trade-Marks Act, R.S.C. 1985, c. T-13, as amended. BMW also claimed that Nissan’s use of the trade-marks M and M6 in the marketing of its Infiniti brand of cars violated BMW’s rights in a number of its trade-marks, contrary to paragraph 7(b) of the Act. MacKay J. concluded that BMW had not made out its claim for infringement and depreciation of goodwill, but was successful in part in arguing that Nissan was liable for passing off contrary to paragraph 7(b). As a result of the latter holding, Justice MacKay ordered the following relief, which Nissan now seeks to stay:
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 other 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] In RJR-Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 (“RJR-Macdonald”), the Supreme Court of Canada set out a three-part test to determine whether a stay should be granted. The Court explained the three parts of this test as follows:
First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.
[4] The first question in assessing this motion, therefore, is whether there is a serious issue to be tried. During the hearing of the motion, very little argument was directed to this question and thus there would seem to be no reason to deviate from my previous reasons on this issue. Moreover, counsel for BMW acknowledged that the critical issue on this motion is whether Nissan has established irreparable harm as a result of MacKay J.’s Judgment. Consequently, I am satisfied that there is a serious issue to be tried.
[5] The second question for me to address is whether Nissan will suffer irreparable harm from a refusal to grant a stay. Nissan stresses that its reputation will suffer considerably if a stay of MacKay J.’s Judgment is not granted as a result of the various steps that need to be taken to ensure it does not use M and M6 in its marketing material. BMW, on the other hand, argues that there has been no evidence of irreparable harm to Nissan. In addition, BMW has offered to agree to allow Nissan until March 30, 2007 to remove all trade-mark references to M and M6 on its websites and until April 15, 2007 to remove all trade-mark references to M and M6 from its brochures and other printed literature.
[6] After considering the submissions of the parties, I am satisfied that Nissan has established that it will suffer irreparable harm if required to comply with MacKay J.’s Judgment prior to the disposition of its appeal. In particular, Nissan will be unable to rely on its family branding in promoting the Infiniti M family of vehicles, as is the practice among other luxury vehicle manufacturers. Nissan presented evidence that other manufacturers use this type of family branding, even using the letter M to designate a class. Moreover, if successful on appeal, Nissan will revert to family branding in promoting its Infiniti M vehicles to maintain consistency with the advertising message used in the U.S. and that used with respect to its other lines of Infiniti vehicles. This inconsistency will likely leave a negative message in the minds of consumers. Nissan’s affiant, Ian Forsyth, swore that such a disruption in Nissan’s marketing strategy would cause customers to mistakenly wonder if there was a problem with the cars being promoted, threatening Nissan’s reputation.
[7] Without a stay, Nissan would also be required to discontinue its practice of distributing reprints of favourable articles written by third parties that refer to the vehicles by reference to the letter M alone, such as “Infiniti M” cars. This disruption is likely to have a negative impact on the ability of Nissan to market its vehicles, particularly because many customers put a great deal of weight on reviews of vehicles by third parties.
[8] Furthermore, to comply with MacKay J.’s Judgment, Nissan will have to incur expense in revising its promotional materials, such as its brochures and websites, to remove references to M and M6. BMW, however, has failed to provide an undertaking as to damages, thereby preventing Nissan from recovering these costs should it succeed on appeal. Marceau J.A. explained this situation in Apotex Inc. v. Wellcome Foundation Ltd. (1998), 82 C.P.R. (3d) 429 (F.C.A.) (“Wellcome”) at paragraph 4:
There is now an injunction in force ordering both appellants to immediately cease all marketing activities involving zidovudine products. If the appeal is successful, it will become clear then that this injunction was issued erroneously and that the important loss of profits suffered by both appellants for having been excluded from the market would have been imposed on them without real justification and only as a result of a judicial error. There being no undertaking as to damages offered by the respondents, there will be no way then far [sic] the appellants to recover their losses. No cause of action could support a claim against the respondents or any other potential defendant.
[9] At the hearing, counsel for BMW stressed that Nissan was unable to point to any concrete evidence of harm that would be suffered by Nissan as a result of compliance with MacKay J.’s Judgment and was instead merely speculating about the harms that might arise. However, as Justice Rothstein, then speaking for the Federal Court, Trial Division, explained in Ciba-Geigy Canada Ltd. v. Novopharm Ltd. (1994), 56 C.P.R. (3d) 289 at 325 (F.C.T.D.), in situations such as that in the present case, the harm that will arise may be inferred from the evidence presented:
It will be remembered that these applications are brought quia timet. There is no actual evidence of harm because the defendants are not yet in the market- place. The evidence relating to loss resulting in irreparable harm must, of necessity, be inferred. I do not think that Heald J.A. was precluding the drawing of such inferences or other inferences that logically follow from the evidence.
[10] In any event, Nissan has been able to point to harm already suffered as a result of the injunction. After MacKay J.’s Judgment was released on March 7, 2007, it instructed its customer service department to discontinue sending out brochures to customers who called to ask for them and has received complaints from dissatisfied customers as a result.
[11] In establishing irreparable harm, it is not necessary for the moving party to show that the very viability of the business is threatened (Wellcome at paragraph 8). In my view, the reputational and financial consequences Nissan will likely suffer from having to comply with MacKay J.’s Judgment meet the test for irreparable harm.
[12] Finally, the last element of the RJR-Macdonald test that I must consider is which of the parties will suffer the greater harm from the granting or refusal of the stay. I have already found that Nissan will suffer irreparable harm if a stay is not granted. BMW, conversely, was not able to show that it will suffer any such irreparable harm if the stay is granted. Moreover, as I have already explained, BMW counsel stated in the hearing that the outcome of the motion would turn on the second element of the RJR-Macdonald test, that is, whether Nissan would suffer irreparable harm. Accordingly, I conclude that the balance of convenience favours Nissan.
[13] For these reasons, the stay will be granted with costs in the cause.
“J. Edgar Sexton”
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.,
BAYERISCHE MOTOREN WERKE
AKTIENGELSELLSCHAFT
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: MARCH 22, 2007
REASONS FOR ORDER BY: SEXTON J.A.
APPEARANCES BY:
Carol Hitchman
Warren Sprigings FOR THE appellant
Ron Dimock
Henry Lue FOR THE Respondents
SOLICITORS OF RECORD:
Dimock Stratton LLP
Toronto, ON FOR THE APPELLANT
Hitchman & Sprigings
Toronto, ON FOR THE RESPONDENTS