Passing off claim dismissed for lack of evidence of damages

In Pharmacommunications Holdings Inc v Avencia International Inc (2008 FC 828, July 2 2008), the Federal Court of Canada has held that Pharmacommunications Holdings Inc's application seeking a declaration that the respondents were liable for statutory passing off pursuant to Section 7(b) of the Trademarks Act should be dismissed with costs against Pharmacommunications.
Pharmacommunications, which was incorporated in 1995, contended that it owned the unregistered trademark PHARMACOMMUNICATIONS. The mark is used in Canada in association with marketing, advertising and related consulting services to the pharmaceutical industry.
The respondents in this case were Avencia International Inc and three individuals (Jason Lewis, Donald Lajoie and Gregory Kochuk). Avencia registered the name PharmaComm on December 2 2004 and has since been operating under that name. It claimed to be an advertising agency that offers "brand consultation, media advertising, product promotion and sales techniques" services.
Pharmacommunications sought:
  • a declaration that the business name PharmaComm is confusingly similar to its unregistered trademark PHARMACOMMUNICATIONS; and
  • a permanent injunction order restraining the respondents from using the name PharmaComm as a trade name, trademark or otherwise.
First, the court stated that the probative value of a document filed by Pharmacommunications more than a year after the beginning of the proceedings (as an attempt to show that Pharmacommunications was referred to as PharmaComm by at least one client) was "very weak". The court took into consideration the fact that the credibility of Pharmacommunications’s president had been weakened by a prior case in which he had been found guilty of contempt of court.
Among other arguments, the respondents contended that:
  • 'pharma' and 'communications' were commonly used descriptive words;
  • a certain amount of confusion must be accepted when non-distinctive names are chosen; and 
  • Pharmacommunications had failed to show any actual or potential damages resulting from the respondents’ conduct.
In the circumstances, the only issue that the court found to be relevant was whether the respondents were liable for statutory passing off. Pursuant to Subsection 7(b) of the Trademarks Act:
"No person shall direct public attention to his wares, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his wares, services or business, and the wares, services or business of another."
The court reiterated that Subsection 7(b) is the equivalent statutory expression of the common law tort of passing off, which requires:
  • the existence of goodwill; 
  • deception of the public due to a misrepresentation; and
  • actual or potential damage to the plaintiff.
In addition, a successful claim of statutory passing off must also include a proof of possession of a valid and enforceable trademark, whether registered or not.
However, the court stated that it did not need to discuss whether Pharmacommunications had met the burden of proof required for all of the various elements of this statutory infringement claim, given that it had failed to meet one of them - namely, the requirement to show actual or potential damage.
The court agreed with the respondents’ submissions that Pharmacommunications made no submissions and presented no evidence whatsoever to establish actual or potential damage. The court referred to BMW Canada Inc v Nissan Canada Inc (2007 FCA 255), in which it was held that actual or potential damages cannot be presumed (for further details please see "M marks ruling reversed"). The court thus concluded that the respondents could not be found to be involved in passing off and dismissed the application. 
The decision provides a reminder that a successful claim requires proof of each element of the applicable test.
Marcel Naud, Léger Robic Richard LLP, Montreal

Unlock unlimited access to all WTR content