Limits of trademark registration as defence to passing off clarified

Canada

In Woodpecker Hardwood Floors (2000) Inc v Wiston International Trade (September 13 2013), the British Columbia Supreme Court has clarified the limits of a registered trademark as a defence to an action in passing off.

The plaintiff, Woodpecker Hardwood Floors (2000) Inc, had been using its trade name in the hardwood flooring business since at least 2000, when it purchased the assets, including the name and goodwill, of Woodpecker Hardwood Floors (1987) Ltd. In 2009 the defendant, Wiston International Trade, began competing in the hardwood flooring business using the name Wiston at a location merely 1.4 km away from Woodpecker’s showroom. It was not disputed that Wiston was aware of Woodpecker’s name and business. 

In January 2013 Wiston International obtained registration of several trademarks, including the word 'Woodpecker', from the Canadian Intellectual Property Office and then began to operate its hardwood flooring business using WOODPECKER as a trademark.

Woodpecker sought an interlocutory injunction to restrain Wiston from using the name Woodpecker.   Woodpecker alleged that there was a serious question to be tried, that it would suffer irreparable harm through the loss of business due to confusion and loss of control over its goodwill, and that the balance of convenience weighed in favour of Woodpecker. In defence, Wiston alleged that:

  • the British Columbia Supreme Court had no jurisdiction to deal with the matter;
  • their registered trademarks constituted a complete defence to the action of passing off;
  • Woodpecker had failed to prove irreparable harm;
  • there was no actual or potential confusion; and
  • Woodpecker’s six-month delay in bringing the action was a factor to be weighed against the plaintiff.

Wiston argued that, pursuant to Section 19 of the Trademarks Act, its registered trademarks constituted a complete defence to Woodpecker’s injunction. Specifically, Wiston relied on a number of cases, including the decision of the Ontario Court of Appeal in Molson Canada v Oland Breweries Ltd ((2002) 19 CPR (4th) 201 (Ont CA)), to claim that a registered trademark must be expunged before another party could bring a passing-off action. In response, Woodpecker argued that the registration must be validly obtained in order to constitute a complete defence, and in this case, the registration was invalid due to Wiston’s prior knowledge of Woodpecker’s use of the trade name. 

Justice Silverman examined Section 19 of the Trademarks Act, and held that the provision does not grant exclusive rights to use a trademark “unless it is expunged or until it is expunged”; rather, Section 19 grants the owner of the registered mark exclusive use unless the mark is “shown to be invalid”. Invalidity and expungement are separate issues. Further, the case law relied upon by Wiston did not suggest that registration constituted a complete defence to passing off until the marks were expunged, but that they constituted a complete defence to passing off unless the marks were found to be invalid. In this case, Justice Silverman concluded that, in an application for an interlocutory injunction, it was not necessary to determine with certainty whether Wiston’s trademarks were invalid, but only that there was a serious question to be tried with respect to the validity of the trademarks.  

With respect to the factor of irreparable harm, Wiston relied on Centre Ice Ltd v National Hockey League ([1994] 53 CPR (3d) 34 (FCA)) for the proposition that evidence of irreparable harm must be clear and not speculative. Wiston alleged that Woodpecker had only alleged a likelihood of harm based on the loss of goodwill. Justice Silverman rejected this argument, concluding that it was not speculative for a plaintiff to bring evidence that they would suffer damages in the future and that such damages would not be quantifiable. Not quantifiable is not the same as speculative. Finally, Justice Silverman concluded that the longer the defendant was permitted to use the trade name Woodpecker in a confusingly similar way, the more prevalent it would become among the public, thus exacerbating the harm suffered by the plaintiff and making it more difficult to unscramble the losses suffered by the plaintiff due to the confusion of the marks, or losses due to normal business competition.

Having found that there was a serious question to be tried, that Woodpecker would suffer irreparable harm if injunctive relief were not granted, and that the balance of convenience lay in favour of Woodpecker, Justice Silverman granted an interlocutory injunction restraining Wiston from using the name Woodpecker in association with the sales of its goods and services in British Columbia.

Samantha Chang, Fasken Martineau DuMoulin LLP, Vancouver

The plaintiff was represented by David Wotherspoon and Samantha Chang (articled student) of Fasken Martineau DuMoulin LLP.

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