User of OMAC and CMAC fails to prevent use of CMEC


In CMAC Mortgages Ltd v Canadian Mortgage Expert Centres Ltd (2008 FC 6 (CanLII), January 4 2008), the Federal Court of Canada has dismissed a motion for an interlocutory injunction filed by CMAC Mortgages Ltd, CMAC Mortgages (Alberta) Ltd and Ontario Mortgage Action Centre Ltd (carrying on business as OMAC). The action aimed to prevent the defendants, two natural persons and Canadian Mortgage Expert Centres Ltd (carrying on business as CMEC), from:

  • using CMEC, or any word confusingly similar to CMAC or OMAC, in association with a mortgage brokerage business;

  • using any domain name containing the acronym CMEC or any word confusingly similar to CMAC or OMAC; and

  • passing off the defendants' business as that of the plaintiffs.

Ontario Mortgage Action Centre began its operations in 1993 in the province of Ontario. Its first registration for the OMAC trademark was granted in 2003 in connection with mortgage and loan brokerage, and loan financing.

In view of expanding its business on a national level, Ontario Mortgage Action Centre started CMAC Mortgage and incorporated it on August 1 2006. In its corporate name, 'CMAC' would stand for 'Canadian Mortgage Action Centre', as the plaintiffs acknowledged that Ontario Mortgage Action Centre would not work outside of Ontario. However, the only location opened by CMAC Mortgage as of the end of November 2007 was in the province of Alberta and it had been opened only since mid to late September 2007. CMAC Mortgage never operated in the province of Ontario, while Ontario Mortgage Action Centre operated in 29 locations, solely in Ontario.

The defendant Canadian Mortgage Expert Centres Ltd was incorporated in the province of Ontario on December 5 2006. It admitted to selecting a fairly descriptive name using the word 'Canadian' to avoid geographical limitation. Canadian Mortgage Expert was not open for business until mid-July 2007 and, as of early December 2007, Canadian Mortgage Expert operated only at two locations in Ontario. The record also established that the owner of the plaintiffs and one of the natural persons among the defendants were business partners until 2005.

The plaintiffs submitted evidence of actual confusion between Ontario Mortgage Action Centre and Canadian Mortgage Expert, including:

  • a double hearsay found in a reply affidavit according to which the producer of a television show was surprised that the persons interviewed were from Canadian Mortgage Expert and not from Ontario Mortgage Action Centre; and

  • two faxes from a mortgage lender which were intended for Canadian Mortgage Expert but were sent to Ontario Mortgage Action Centre's head office, and which were filed as exhibits to one of two supplementary affidavits of the plaintiffs that were lacking cross-examination.

In his affidavit, one of the defendants stated that the acronym CMEC was always presented with a design element and was accompanied by the full name of the company on signage, business cards, letterhead and in all advertising. Canadian Mortgage Expert's staff was also asked to answer the phone using the full company name.

In order for a court to grant an interlocutory injunction, the evidence must show:

  • that there is a serious question to be tried;

  • the existence of irreparable harm if the application is refused; and

  • that the balance of convenience favours the plaintiffs.

In the court's view, the facts of the case supported findings that, among other things:

  • there was a serious question to be tried, but only between Ontario Mortgage Action Centre and Canadian Mortgage Expert, and not between the two other plaintiffs and Canadian Mortgage Expert, because they were not both present in the same marketplace; and

  • the defendants would suffer greater harm from the grant of an interlocutory injunction pending a decision on the merits than what the plaintiffs would suffer from the refusal of such injunction.

Moreover, in its preliminary assessment of the issues to be tried, the court took into account the fact that:

"buying mortgage services is not like buying wares off a shelf in a store. A buyer of such services will be more discriminating because it is he or she who is borrowing large sums. The delivery of mortgage brokerage services is a hands-on personal service which reduces the risk of confusion."

The court also considered that the jurisprudence indicates that the OMAC and CMEC acronyms, strictly in terms of the letters, were weak marks because of a lack of distinctiveness.

Accordingly, the plaintiffs' motion for an interlocutory injunction was dismissed.

Marcel Naud, Léger Robic Richard LLP, Montreal

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