No evidence of use or intention to use halts infringement claim

In Price Costco International Inc v Welcome Warehouse Ltd (Case 2007 BCSC 1227), the Supreme Court of British Columbia has dismissed an application for a declaration of trademark infringement or passing off following the defendant's application to register the mark PRICECO WAREHOUSE.

The plaintiffs in the case are Costco Wholesale Canada Ltd, a Canadian corporation, and its affiliate, Price Costco International Inc, which is a US corporation. Price Costco is the owner of the following Canadian trademark registrations: PRICE CLUB, PRICE COSTCO, PRICE COSTCO (and design), COSTCO, COSTCO (and design) and COSTCO WHOLESALE (and design). The goods or services under these registrations generally relate to retail, wholesale, discount department and grocery store services.

The defendant, Welcome Warehouse Ltd, runs a retail warehouse store in a manner very similar to the Costco stores. Welcome Warehouse applied to register the trademark PRICECO WAREHOUSE to be used in association with "operation of retail stores selling virtually all kinds of general merchandise". An approval notice was issued for Welcome Warehouse's application, meaning that the registrar of trademarks initial decision was that PRICECO WAREHOUSE is not confusing with any registered mark, including Price Costco's trademarks.

Price Costco filed a statement of opposition at the Trademarks Office. Welcome Warehouse instituted proceedings before the registrar of trademarks to expunge Price Costco's registrations.

In response, Price Costco filed an action before the court seeking:

• declarations of passing off, trademark infringement and depreciation of goodwill with respect to Welcome Warehouse's intended use of the trademark PRICECO WAREHOUSE or any other trademark confusingly similar to any of Price Costco's marks; and
  
  
• a permanent injunction restraining Welcome Warehouse from operating retail stores in association with the trademark PRICECO WAREHOUSE or any other trademark likely to cause confusion with Price Costco's marks.

Price Costco submitted two expert reports, the first of which was a 'recognition survey'. This indicated that the level of recognition of the PRICE CLUB mark was approximately 57% - higher than that of some other well-known retail outlets. The second report was designed to address the issue of likelihood of confusion with respect to the use of the proposed mark PRICECO WAREHOUSE. The conclusion was that approximately 44% of those answering the survey expressed a belief that a general merchandise retail store bearing that name was either owned or operated by Price Costco or with its approval, or has an affiliation or connection with Price Costco.

The surveys were not strongly challenged. However, Welcome Warehouse undertook not to use PRICECO as a mark unless its trademark is registered.

A first legal hurdle for Price Costco to overcome was whether it had standing to bring an action for a declaration. In order for such an action to proceed, there must be a real, rather than a fictitious, theoretical or academic issue. The person raising such an issue must:

• have a real interest to raise it; and
  
  
• be able to secure a proper contradictor (ie, a person that has a true interest to oppose the declaration sought).

The courts are reluctant to grant non-interlocutory declaratory or injunctive relief where there is no evidence of any actual infringement or damage by the defendant.

The court decided in favour of Welcome Warehouse, and did not grant a declaration or an injunction. It held that it would be unjust to decide this dispute where the alleged infringement consists only of Welcome Warehouse exercising its rights under the Canadian Trademarks Act to apply to register the trademark.

The court held that the evidence of passing off and infringement fell short. There was no evidence of actual use of the PRICECO WAREHOUSE mark, or anything similar, and no evidence of intention to use it unless the registrar of trademarks allows registration. Moreover, Welcome Warehouse had undertaken in writing not to use any such mark until that time. Because of this, the court held that there was no "real" probability of passing off or infringement.

The court held that Price Costco would have a good case for the remedies sought if the registrar refuses registration and Welcome Warehouse does not quit its ambition to use PRICECO in its trademark. Price Costco could bring a new application at such time if necessary.

John Macera, Macera & Jarzyna - Moffat & Co, Ottawa