Date: 20040216
Docket: T-1489-99
Citation: 2004 FC 235
Ottawa, Ontario, this 16th day of February, 2004
PRESENT: THE HONOURABLE MADAM JUSTICE SNIDER
BETWEEN:
ALTICOR INC. and
QUIXTAR CANADA CORPORATION
Plaintiffs
(Defendants by Counterclaim)
- and -
NUTRAVITE PHARMACEUTICALS INC.
Defendant
(Plaintiff by Counterclaim)
REASONS FOR ORDER AND ORDER
SNIDER J.
[1] The Plaintiffs, Alticor Inc. and Quixtar Canada Corporation, through a complex corporate history described in Appendix A to these reasons, hold the rights to the trade-mark NUTRILITE, registered in Canada on March 28, 1952. The Plaintiffs claim that NUTRILITE products, which include a variety of vitamin, mineral and herbal supplements, have been marketed and sold in Canada for over 50 years. These products are not available in retail outlets in Canada but through a multi-level marketing program that is described later in this judgment. Since 1998, the Plaintiffs have sold a number of NUTRILITE products with the trade-mark BEST OF NATURE - BEST OF SCIENCE.
[2] The Defendant, Nutravite Pharmaceuticals Inc., has produced and sold products labelled with the name NUTRAVITE in retail outlets in Canada since about 1992. Generally speaking, the Defendant's line of products consists of vitamin, mineral and herbal supplements. In 1992, the Defendant attempted to register NUTRAVITE as a trade-mark. The application was successfully opposed by Amway, predecessor in interest to the Plaintiffs, and the trade-mark was not registered (Amway Corp. v. Nutravite Pharmaceuticals Inc. (1997), 84 C.P.R. (3d) 276 (the "Opposition Decision")). Despite this ruling, the Defendant has continued to sell its products in stores under the name NUTRAVITE. For a period of time, the Defendant also used the trade-mark A PERFECT BLEND OF SCIENCE AND NATURE in association with its products, stopping its use as a consequence of the initiation of this litigation.
[3] In 1999, the Plaintiffs commenced this infringement action, claiming that the NUTRAVITE mark is likely to be confused with the Plaintiff's NUTRILITE. In addition, the Plaintiffs have brought a claim of passing off based on the sale and distribution by the Defendant of its products in association with both marks NUTRAVITE and A PERFECT BLEND OF SCIENCE AND NATURE.
[4] The Defendant, by way of counterclaim, alleges that the trade-mark NUTRILITE is not valid because, as of the date of its registration on March 28, 1952, it was not registrable.
Issues
[5] In determining whether the Defendant infringes the exclusive rights of the Plaintiff in the registered trade-mark NUTRILITE contrary to sections 19 and 20 of the Trade-marks Act, R.S.C. 1985, c.T-13, as amended (the "Act"), the following issues must be determined:
1. Was the trade-mark NUTRILITE unregistrable at the date of registration contrary to subsection 26©) or (e) of the Unfair Competition Act, R.S.C. 1952, c. 274 (the "Unfair Competition Act") because it was the name of or descriptive of the character or quality of the wares in connection with which it was to be used, thereby causing the trade-mark registration No. UCA 425408 for the trade-mark NUTRILITE, registered in Canada on March 28, 1952, to be invalid, pursuant to section 18(1)(a) of the Act?
2. Does the Defendant's use of the trade-mark NUTRAVITE in association with vitamin, mineral and herbal supplements cause confusion in that such use is likely to lead to the inference that NUTRAVITE products and NUTRILITE products are manufactured or sold by the same person, as set out in subsection 6(2) of the Act?
[6] With respect to the claim of passing off, the following issue must be determined:
1. Has the Defendant directed public attention to its wares and business in such a way as to be likely to cause confusion in Canada, contrary to section 7(b) of the Act, through use of the trade-marks NUTRAVITE and A PERFECT BLEND OF SCIENCE AND NATURE on its products?
[7] The validity of the NUTRILITE registration is a threshold issue. If the trade-mark is found to be unregistrable, there can be no infringement or passing off. Accordingly, I will deal with this issue first.
Issue #1: Validity of the NUTRILITE trade-mark
[8] The trade-mark NUTRILITE was registered in Canada on March 28, 1952. At that time, the Unfair Competition Act provided that a word mark is registrable if it is not the name in any language of any of the wares in connection with which it is to be used (Unfair Competition Act, s. 26(e)) and if it was not descriptive of the character or quality of the wares in connection with which it is proposed to be used (Unfair Competition Act, s. 26©)).
[9] The Defendant submits that, at the time of its registration in Canada, the trade-mark NUTRILITE did not meet these stated criteria in that it was descriptive of the character of the wares produced by the predecessor to the Plaintiffs. Thus, the Defendant argues, the trade-mark was unregistrable. If NUTRILITE was unregistrable on March 28, 1952, s. 18(1)(a) of the Act is applicable and the registration is invalid. If the registration is invalid, there can be no claim of infringement under the Act.
[10] To support this argument, the Defendant relies on the existence of the word "nutrilite" in scientific journals and certain dictionaries.
[11] Through affidavit evidence, the Defendant has shown use of the word "nutrilite" in over 37 scientific journal articles from the period 1928 to 1952. The word, according to one of the dictionary definitions submitted, means "any of several substances, as certain minerals that, in minute quantities, serve as nutrients for microorganisms" [The Random House Dictionary of the English Language: Second Edition Unabridged (1987) New York: Random House]. Other meanings submitted are similar. The link between the word "nutrilite" and the product of the same name was described by Dr. Karl S. (Sam) Rehnborg, President of Nutrilite Health Institute and the son of the founder of NUTRILITE products, Mr. Karl F. Rehnborg. I heard from Dr. Rehnborg that his father's first product-a multi-vitamin, multi-mineral supplement initially distributed in California in 1934-was intended to supplement what was missing from the western diet at the time. Mr. Rehnborg first encountered the word "nutrilite" in a 1928 science journal article where the term was used to mean "all those vitamin-like substances which in small amounts function in the nutrition of organisms generally" (Williams, "The Pathology of Certain Virus Diseases" (June 15, 1928) 1746 Science 607). Mr. Rehnborg appropriated the word. It is not clear how this was done; how or whether the author was contacted for permission is uncertain. In any event, the NUTRILITE trade-mark was subsequently registered in the United States and, in 1952, in Canada.
[12] This evidence suggests that NUTRILITE is a word that is descriptive of the character of the wares that bear its name. Vitamin, mineral and herbal supplements would, in my view, qualify as "any of several substances, as certain minerals, that, in minute quantities, serve as nutrients for microorganisms" (The Random House Dictionary, supra) or as examples of "a nourishing compound" (McGraw-Hill Dictionary of Scientific and Technical Terms, 6th ed. (Toronto: The McGraw-Hill Companies, Inc., 2003)). Indeed, that was the very reason that Mr. Rehnborg adopted the name in the first place. On its face, this is an argument in favour of the Defendant's counterclaim.
[13] The Plaintiffs counter with the proposition that the Defendant must show that the average Canadian consumer knew or understood the meaning of "nutrilite". It is not, in their submission, sufficient to show that the word was in use in some obscure scientific journals.
[14] The Plaintiffs referred me to the decision of this Court in ITV Technologies, Inc. v. WIC Television Ltd., [2003] F.C.J. No. 1335 (F.C.) (QL). That case arose from the use of the letters ITV by the plaintiff despite the objections of the defendant, which holds several registered trade-marks incorporating the initials ITV. ITV sought to have WIC's trade-marks expunged on the ground, among others, that they were not registrable. The Court was presented with documentary evidence in the form of copies of magazine articles and dictionaries, as well as print-outs from on-line dictionaries and library searches. In her judgment in that case, Justice Tremblay-Lamer's comments have considerable applicability to the case before me. In rejecting the applicability of the documentary evidence to the question of the invalidity of the trade-marks, Justice Tremblay-Lamer noted that:
· there was little evidence that Canadians knew of or read the material, much of which came from specialized publications of which the average Canadian consumer would be unaware (at para. 106); and,
· the "spill over into Canada of foreign references . . . will not invalidate a Canadian trade-mark registration" (at para.107).
[15] I am faced with a similar situation here. The Defendant presented no evidence to show that the word "nutrilite" was known to the average Canadian consumer in 1952. The various science journal articles presented to me from that time were mainly foreign in origin and there was no evidence of the extent of their distribution in Canada. Thus, I cannot fairly conclude that even the Canadian scientific community was familiar with the word "nutrilite". On this issue, the Defendant bears the burden of proving, on the balance of probabilities, that the trade-mark NUTRILITE was unregistrable on March 1952. The evidence, in my view, is not sufficient to satisfy the legal onus required to invalidate the trade-mark. Accordingly, the Defendant's counterclaim fails.
Issue #2: Confusion
1. General Matters
a) Legislative framework
[16] Having determined that the registration of the trade-mark NUTRILITE is not invalid, I turn now to a discussion of the issue of confusion. The Act sets out a comprehensive scheme for my task. The starting point is s. 19 of the Act, which states that the registration of a trade-mark in respect of certain wares gives to its owner the exclusive right to the use throughout Canada of that trade-mark in association with its wares. The rights of the owner are further described in s. 20(1) of the Act, which provides that the right to exclusive use of the trade-mark is infringed if another party sells, distributes or advertises wares in association with a confusing trade-mark. In this case, the Plaintiffs claim that, with its NUTRAVITE products, the Defendant is selling or distributing wares in association with a trade-mark that is confusing.
[17] In s. 6, the Act sets out, in some detail, what I must consider when determining whether a trade-mark is confusing with respect to another trade-mark. The two relevant provisions are as follows:
| 6(2) The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
(5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including
(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;
(b) the length of time the trade-marks or trade-names have been in use;
©) the nature of the wares, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them. |
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6 2) L'emploi d'une marque de commerce crée de la confusion avec une autre marque de commerce lorsque l'emploi des deux marques de commerce dans la même région serait susceptible de faire conclure que les marchandises liées à ces marques de commerce sont fabriquées, vendues, données à bail ou louées, ou que les services liés à ces marques sont loués ou exécutés, par la même personne, que ces marchandises ou ces services soient ou non de la même catégorie générale.
5) En décidant si des marques de commerce ou des noms commerciaux créent de la confusion, le tribunal ou le registraire, selon le cas, tient compte de toutes les circonstances de l'espèce, y compris_:
a) le caractère distinctif inhérent des marques de commerce ou noms commerciaux, et la mesure dans laquelle ils sont devenus connus;
b) la période pendant laquelle les marques de commerce ou noms commerciaux ont été en usage;
c) le genre de marchandises, services ou entreprises;
d) la nature du commerce;
e) le degré de ressemblance entre les marques de commerce ou les noms commerciaux dans la présentation ou le son, ou dans les idées qu'ils suggèrent. |
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b) General Principles
[18] The following are some overarching principles that apply to this case:
I) In an infringement action, the onus is on the Plaintiffs to establish confusion (Canadian Memorial Services v. Personal Alternative Funeral Services Ltd. (2000), 4 C.P.R. (4th) 440 (F.C.T.D.).
ii) The general test for confusion has been stated as "whether, as a matter of first impression in the mind of an average consumer having a vague or imperfect recollection of another mark, the use of both trade-marks in the same area and in the same manner is likely to lead to the inference that wares associated with those marks are produced or marketed by the same company." (Polo Ralph Lauren Corp. v. United States Polo Assn. (2000), 9 C.P.R. (4th) 51 at para. 3 (F.C.A.)). In other words, I must put myself into the position of an average consumer who has some recollection of the NUTRILITE mark. The question then becomes whether this person would, on encountering the NUTRAVITE products, infer that the NUTRAVITE wares are somehow associated with the NUTRILITE wares. If the answer to this question is "yes", I will find that there has been confusion.
iii) In assessing the likelihood of confusion, I must have regard to the factors enumerated in subsection 6(5) and to the surrounding circumstances. These factors need not be attributed equal weight; the particular facts of a case may justify greater emphasis being given to one criterion (Polo Ralph Lauren, supra at para. 18).
c) Material Date
[19] The Plaintiffs argue that the material date for determining a likelihood of confusion should be the date on which the Defendant first commenced its sale of NUTRAVITE products in Canada, that being some time in 1992. The Defendant submits that the relevant date is the date of this trial. There is a decision of this Court that suggests that the date of the trial is the material date (Cartier Inc. v. Cartier Optical Ltd. (1988), 20 C.P.R. (3d) 68 at 80-81 (F.C.T.D.)). The reasoning of Justice Dubé in that decision was that s. 20 of the Act is worded in the present tense. That is a logical interpretation of the Act. Accordingly, for purposes of the determination of the question of confusion, I find that the material date for assessing whether there is confusion is the date of this proceeding.
[20] As I view that record before me, one consequence of this determination relates to the question of co-existence; if I were looking at the first sale of NUTRAVITE products as the material date, there would be no need for me to consider the effect of co-existence of the two product lines since that date. Another instance where this determination becomes pertinent is the state of the Canadian marketplace. The evidence before me was of the state of the marketplace and the trade-marks register at the time of this trial and not as of 1992.
2. Subsection 6(5) Factors
a) Inherent distinctiveness and the extent to which the trade-marks have become known (paragraph 6(5)(a))
[21] The first factor for my consideration is the distinctiveness of the trade-marks in question. For the purposes of this factor, I equate distinctiveness with originality. An original trade-mark will be distinctive from its inception and will receive stronger protection from this court.
[22] However, where the trade-mark lacks originality, it is less distinctive and "[t]he ambit of protection afforded . . . is much less than for a strong mark and registration of other marks containing comparatively small differences may be permitted" (Cochrane-Dunlop Hardware Ltd. v. Capital Diversified Industries (1976), 30 C.P.R. (2d) 176 at 182 (Ont. C.A.).
[23] The Defendant acknowledges that its trade-mark NUTRAVITE is not inherently distinctive.
[24] In this case, as discussed above, the NUTRILITE mark was selected expressly because the founder considered that the word was descriptive of the products. Aside from the meaning of the word as a whole, the prefix "nutri", which forms part of the word "nutrition", contributes to the lack of distinctiveness of the trade-mark. I am satisfied that the mark lacks inherent distinctiveness.
[25] I must also examine whether the mark has acquired distinctiveness through becoming well-known in association with the wares that bear its name. It may be that the product has become so closely connected with vitamin, mineral and herbal supplements that it has acquired distinctiveness. Since the length of time in use is set out as a separate factor, this determination must mean something other than merely having been in the public domain for an extended period of time.
[26] The evidence put forward by the Plaintiffs on this aspect of the first factor was simply (a) the mark has been extensively used, promoted and advertised in Canada for more than twenty years prior to any use by the Defendant; and, (b) the volume of sales of the NUTRILITE products at a date prior to that of the Defendant indicates that the mark is well known to consumers. I find neither of these to be persuasive in respect of the first factor.
[1] The length of time in use is discussed in the next section and, in any event, is not evidence that the mark is well known. It is, I expect, quite common for products to be "around" and not to be well known. Further, I note the testimony of Mr. Kent Macleod, the owner of Nutri-Chem Pharmacy, an Ottawa health pharmacy. In spite of being in the business of nutritional supplements for over 20 years, Mr. Macleod had never heard of NUTRILITE before this litigation commenced. Similarly, evidence of sales in Canada does not, without something further, persuade me that the mark is well known. The Plaintiffs raise the matter of advertising but provided very limited evidence of advertising beyond the confines of the network of Independent Business Operators ("IBOs") that market NUTRILITE products.
[2] Based on the lack of distinctiveness of the NUTRILITE trade-mark and the failure of the Plaintiffs to demonstrate that the mark has become well-known, I find that this factor does not favour the Plaintiffs. All other things being equal, the NUTRILITE trade-mark is one where "[t]he ambit of protection afforded . . . is much less than for a strong mark and registration of other marks containing comparatively small differences may be permitted" (Cochrane-Dunlop, supra).
b) Length of time in use
[3] The next factor to be addressed is the length of time the trade-mark has been in use. The length of time that a mark has been used is obviously a factor that can contribute to confusion. As stated by Justice Linden in United Artists Corp. v. Pink Panther Beauty Corp. (1998), 80 C.P.R. (3d) 247 at 259-260 (F.C.A.):
The length of time that a mark has been used is obviously a factor which will contribute to confusion on behalf of the consumer in determining the origin of wares or services. A mark that has been in use a long time, versus one newly arrived on the scene, is presumed to have made a certain impression which must be given some weight.
[4] With respect to the use of NUTRILITE products in Canada, the Plaintiffs submit that the evidence shows that the products have been sold in Canada since 1948. A summary of the evidence of that use is as follows:
· a letter dated March 4, 1952 from the distributor of the products at that time, indicating the "Probable Date of First Use" in Canada was to be February 1948 through a "prospective" distributor;
· a letter dated March 6, 1952, from Nutrilite Products Inc. listing Canada as a country where the "date of first issue" was February 1948;
· Dr. Karl S. Rehnborg's testimony that, to maintain the trade-mark, quantities of the product were shipped to countries where the mark was registered;
· the testimony of Mr. Gregory Anthoine, who has been an IBO or distributor for the products of the Plaintiffs since 1978, that NUTRILITE products were included in his original starter kit.
[27] In contrast to this evidence of use from 1948, an internal marketing document for NUTRILITE products entitled "Brand Guide", states that, in 1974, "NUTRILITE branded products are introduced in Canada". An article dated September 14, 1972 in a newsletter submitted as evidence stated that "Canadian Amway distributors will not introduce the Nutrilite Food Supplements Line to their markets until some time later in 1973." Mr. Burt Crandell, vice-president of Alticor Inc. and an employee of its predecessor in title since 1978, testified that he had no knowledge of NUTRLITE products in Canada prior to 1974.
[28] The best evidence of use of the branded product in a given market is evidence of the sales. The first fiscal year for which sales figures are available is 1994. In that year, sales of NUTRILITE vitamins and minerals and NUTRILITE herbals were $12,786,000.00. The Defendant argues that there is no evidence pre-dating 1994 on which I can rely to conclude that the trade-mark was used before 1994.
[29] On the basis of the sales records, I am satisfied that the product has been continuously sold in Canada since 1994. However, the evidence prior to that date is less helpful in that it consists of anecdotes and a few documentary references to Canadian sales. I can understand why the exact sales records may not be available. Nevertheless, if the products have been in use as claimed by the Plaintiffs, it seems to me that better evidence could have been produced. Based on the evidence before me, I cannot conclude that the products were used in Canada prior to 1974. The evidence suggests that the earliest distribution into Canada for sale was 1973 or 1974. There are two reasons, however, to conclude that the products have been sold in Canada since 1978. Firstly, the testimony of Mr. Anthoine that samples of the product were contained in his starter kit in 1978 is evidence that the products were available for sale at that time. Secondly, it is illogical to assume that there were no sales prior to 1994, given that sales in that year were over $12,000,000.00. Sales of that magnitude take time to build up. Accordingly, I am satisfied that the trade-mark NUTRILITE has been in use in Canada since 1978. Evidence of use prior to that date is not persuasive.
[30] Since the Defendant's products have only been sold in Canada since 1992, this 14 year market advantage favours the Plaintiffs.
c) Nature of Wares (paragraph 6(5)©))
[31] Paragraph 6(5)©) provides that I must have regard to the "nature of the wares, services or business". One purpose of this provision is to assess the opportunity for confusion. It is common sense that the opportunity for confusion is less if the products are different. If company A produces ice cream bars and company B produces dish washing detergent, it is a rare consumer who would look for company A's products in the household products aisle of the store. No opportunity for confusion exists. On the other hand, if Mr. Submarine and Mr. Subs & Pizza both sell submarine sandwiches, it is entirely conceivable that a consumer might enter either store looking for his lunch fare. In that case, opportunity for confusion exists (Mr. Submarine Ltd. v. Amandista Investments Ltd. (1987), 19 C.P.R. (3d) 3 (F.C.A.)) .
[32] In this case, there is little argument on this factor. The Defendant admits that the products of the two parties are identical with the exception that the Defendant does not sell food bars or drinks. This favours the Plaintiffs. All other factors being ignored for the moment and without considering the surrounding circumstances, our hypothetical consumer, out to buy a bottle of the Plaintiffs' vitamins, would be more likely to be confused, since the Defendant also sells bottles of vitamins. However, as discussed in many of the following sections of these reasons, due to the nature of the trade and other surrounding circumstances, the effects of this finding are diminished.
d) Nature of the Trade (paragraph 6(5)(d))
[33] The fourth of the factors to be considered is the nature of the trade. Can the products be obtained by the consumer through the same channels of trade? As with the nature of the wares, the focus of this factor appears to be on the opportunity for confusion. Focussing once again on a hypothetical consumer, there is a greater likelihood that this person will be confused if the competing product is sold in the same manner. The ultimate question to be asked is where and how a consumer could buy each of the products.
[34] For the most part, the channels of trade of the parties' products were not disputed. The Defendant's products have been available to consumers in the following manner:
· until 1994, NUTRAVITE products were sold in Nutrition Plus Pharmacy, a drug store, located in Edmonton, Alberta and two other small independent pharmacies;
· in 1995, the products became available in several retail outlets in Alberta, Manitoba and British Columbia;
· in January 1996, the products became available at Shoppers Drug Marts, initially only in the western provinces; and,
· today, NUTRAVITE products are sold at selected Shoppers Drug Marts, PharmaPlus Drug Stores and Walmart stores.
A consumer can also obtain the Defendant's products through at least one web site operated by one of the retail outlets.
[35] The channels of trade of the Plaintiffs' products are not as straightforward. Alticor (formerly Amway) manufactures and sells NUTRILITE products through its subsidiaries (See Appendix A for details). Quixtar is the exclusive distributor of NUTRILITE products in Canada and is part of the Alticor family of businesses. Quixtar operates a multi-level marketing program consisting of three categories of people: Independent Business Owners ("IBOs"), Members and Clients.
[36] Quixtar sells NUTRILITE products to IBOs who in turn sell them to Members and Clients. IBOs are essentially ordinary people who maintain their full-time jobs while selling Quixtar products "on the side". They are usually sponsored by other IBOs, who act as mentors to them. The sponsorship of IBO by IBOs is financially rewarded by Quixtar. According to Quixtar's rules and regulations, IBOs are strictly prohibited from selling or displaying Quixtar products, including NUTRILITE, in retail stores. Rather, IBOs are to sell Quixtar products to Members and Clients. A Member is someone who pays an initial fee and can then purchase NUTRILITE and other Quixtar products at a reduced cost. A Client is someone who purchases products at their regular price. Members and Clients can only purchase products from IBOs. This can be done directly by meeting an IBO in person.
[37] NUTRILITE products can also be purchased through Quixtar's website. If a prospective purchaser is already registered, products may be purchased by entering a Quixtar number and password. New visitors to the web site can only register and buy products if they have been referred by an IBO and know this IBO's number and name. If not referred, the prospective customer needs to fill out a form and be contacted by an IBO for sponsorship.
[38] In any given year, there are about 70,000 IBOs in Canada. IBOs are bound by agreements that forbid them to sell except in accordance with the Quixtar's rules. Specifically, no retail sales or advertising are allowed.
[39] To date, NUTRILITE products have never been sold in retail stores in Canada.
[40] The essential elements of the method of sales of NUTRILITE have never changed. I heard from Dr. Rehnborg how, from very early on in the history of the products, his father's customers started selling NUTRILITE products. In effect, this created the first distribution of the product through multi-level marketing.
[41] In the course of legal proceedings in the United States that culminated in the U.S. Supreme Court, the marketing of NUTRILITE, in and around 1950, was described as follows:
The drug is not marketed through customary retail channels but is sold by distributors who directly solicit consumers to obtain written contracts (called programs) for delivery of one package of Nutrilite each month. These distributors, who are purchasers of Nutrilite, are sponsored by other distributors, in the defendant Mytinger & Casselberry, Inc. organization who are 'potentate', 'high potentate', or 'exalted potentate' according to the volume of sales produced by his sponsored group (U.S. Notices of Judgment under the Federal Food, Drug, and Cosmetic Act. Drugs and Devices; D.D.N.L., F.D.C. 3381 - 3383 (Issued Aug. 1951), at p. 356.
[42] Mr. Gregory Anthoine, a witness in these proceedings, started as a distributor (now an IBO) in 1978. He has been very successful. In 1951, he would likely have qualified as "an exalted potentate"; today he is a "platinum" level IBO with 200 IBOs in his line of sponsorship. He knows the business very well and testified in a direct and enthusiastic manner. He described the business of Quixtar as building "business networks of business owners, members and consumers". He emphasized the importance of the "personal touch", describing the sales approach as "high-tech/high-touch". When asked how retail sales of NUTRILITE would impact his business, he responded unequivocally that: "I wouldn't believe you because we don't allow stores to handle our products". He agreed with the statement that there was "[no] way on the face of this earth that Alticor would go in there and open up a NUTRILITE vitamin store".
[43] What does this evidence tell us about the channels of trade? In my view, the evidence demonstrates that, not only are NUTRILITE products not sold in retail outlets but, they are unlikely to be sold in any other way except through the multi-level marketing scheme currently in place. In effect, NUTRILITE products have been and are inextricably linked to their method of sale. Retail sales would be incompatible with the manner in which the products are currently sold. With respect to the future, I was not provided with any evidence that the Plaintiffs plan to change or augment the current sales methodology. I saw no business plan or other documented initiative. Nor did any of the corporate witnesses describe plans to expand or change the business.
[44] The Plaintiffs pointed to the web site availability of both product lines as evidence of "overlapping channels of trade". However, purchase of NUTRILITE products online is only possible with the involvement of an IBO. This is merely an extension of the multi-level marketing program and not a different channel of trade. Similarly, I discount evidence of the sale of NUTRILITE products in shops in China. Sales in China, a market remote from North America, are far different from the situation in which the products are sold in Canada.
[45] The Plaintiffs are correct that there is no restriction on the trade-mark registration that prevents them from branching out into any market-including retail trade. In light of this, they argue that I must consider the issue of confusion having regard to whether confusion would be likely if the Plaintiffs "were to operate in . . . any way open to it" (Mr. Submarine Ltd., supra at 12). I think that this is an incorrect view. Surely, I must consider the reality of the situation that there is no evidence that the NUTRILITE products will ever be sold in retail outlets. While there may be no impediment under the trade-mark registration, there appear to be substantial barriers to entry into the retail market. These barriers are those that arise in the relationship of the Plaintiffs and the IBOs through the multi-level marketing scheme. Any move by the Plaintiffs into retail trade is purely speculative. Consequently, I conclude that the nature of the trade of NUTRILITE products is materially different from that of NUTRIVITE products.
[46] What is important about this analysis is how the Plaintiffs' marketing effectively defines and describes our hypothetical purchaser. It is almost a certainty that such a purchaser would be aware that NUTRILITE products are only sold through the Plaintiffs' multi-level marketing program and not in stores. Given the bond between the method of sales and the products, even an imperfect recollection of the mark NUTRILITE would include a recollection of its sales only through IBOs. Our hypothetical consumer of NUTRILITE products is going to be aware of how to buy the products-and it is not in a retail outlet. The possibility of confusion is remote.
e) Degree of Resemblance (paragraph 6(5)(e))
[47] Paragraph 6(5)(e) of the Act states that, in determining whether trade-marks or trade-names are confusing, the court shall have regard to "the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them." To assist the Court in this regard, the Plaintiffs and Defendant presented expert linguists. Dr. Peter A. Reich appeared in these proceedings on behalf of the Plaintiffs and Dr. John K. Chambers appeared on behalf of the Defendant. Both Drs. Reich and Chambers are professors of linguistics at the University of Toronto and former Chairs of the Department of Linguistics. Both of these experts were asked to provide their opinions as to the degree of resemblance between the words NUTRILITE and NUTRAVITE. To this end, Drs. Reich and Chambers analyzed the pronunciation (linguistic-phonology), appearance (psychology) and internal formation (morphology) of these words and came to different conclusions. I will briefly review their opinions.
I) Pronunciation
Dr. Reich noted that: the two words share the same number of syllables; they share the same stress pattern (syllable emphasis); the first and second syllables sound identical; and, the final syllables are virtually identical but for the first consonant ("I" versus "v"). Given this degree of similarity, Dr. Reich was of the view that slips of the tongue are likely in respect of these words.
Dr. Chambers disagreed that slips of the tongue are likely in respect of these words. The chances of someone mistakenly saying "nutrilite" when they intended to say "nutravite", or vice versa, are, according to Dr. Chambers, almost nonexistent, as are the chances of that person failing to correct themselves if they did make that mistake.
ii) Appearance
Dr. Reich stated that there are also significant similarities in the visual shape of these words. Thus, he opined that the degree of visual similarity between these words would cause confusion.
In contrast, Dr. Chambers testified that the letters that differ between these words look totally distinct and bear no resemblance to one another.
iii) Formation and Internal Arrangement
Both experts' evidence was that the words at issue would be broken into the following meaningful parts: nutri-lite and nutra-vite. Dr. Reich stated that the first part of both words relates to words like "nutrient" and "nutrition". In his view, the ending 'lite' is used to indicate less of something (i.e. fat, calories, nicotine, etc.), whereas the ending "vite" would tend to be associated with words such as "vitamins", "vitality" and "vital". Given that the initial and most stressed syllable would produce the same connotation and the last syllables would connote similar concepts of health or well-being, Dr. Reich concluded that Anglophone Canadians are likely to think that products with these names are the same.
Dr. Chambers stated that NUTRILITE appears to be comprised of parts that have familiar or common dictionary meanings, whereas NUTRAVITE is comprised of less familiar parts. Dr. Chambers noted that "nutri" relates to the word "nutrition" and words derived therefrom. For this reason, "nutri" would most likely be construed as having to do with a health-related item. As for "lite", Dr. Chambers suggests the association of something being low in calories. NUTRILITE would most likely be construed as meaning a relatively lighter form of a health-related item.
With respect to the word NUTRIVITE, Dr. Chambers remarked that "nutra" does not occur in any English word and that its closest association is probably "nutrition". Thus, it will invoke the meaning of a healthy food item but less certainly than "nutri". "Vite" is associated with the word "vital", meaning life-sustaining but also important or crucial. It also occurs at the beginning of the word "vitamins". Given these different connotations, Dr. Chambers considered the construable meaning of NUTRAVITE to be less clear than NUTRILITE. For these reasons, the words, in his view, are distinct.
[48] Both experts gave plausible and clear explanations of their conclusions. It is difficult to choose between them.
[49] In pronunciation, I accept that there is no discernable difference between the first syllable of each of the two words; in the middle of a word the vowel "a" and "I" will receive the same pronunciation. However, the differences between "v" and "l" in the context of the whole word appear to me to be significant. This was the view of Dr. Chambers. Thus, I conclude that the pronunciation, while very close, is not going to be a factor causing confusion in most cases.
[50] In appearance, the combination of the different letters does, in my view, create differences between the two words. I prefer the evidence of Dr. Chambers on this point but consider the difference to be slight.
[51] In respect of the internal arrangement of the word, I prefer the analysis of Dr. Reich. While the construable meaning of NUTRAVITE is less clear than that of NUTRILITE, once seen in association with the products of the Defendant or Plaintiffs-vitamin, mineral and herbal supplements-construing NUTRAVITE becomes easier. Thus, it is likely that both words would be construed similarly.
[52] In my view, the morphology of the words appears to be the most holistic approach to analyzing the degree of resemblance. Thus, within the analysis of this factor, I would accord it more weight. I conclude that the marks bear some resemblance one to the other. Any differences, as considered in the vacuum of a linguistics exercise, are relatively minor. This, of course, could operate in the Plaintiffs' favour in that the consumer with an imperfect recollection could confuse the two marks. However, as discussed later in this judgment, there are mitigating circumstances to consider with respect to the resemblance of the marks.
3. Other Surrounding Circumstances
[53] As indicated earlier, an examination of the factors in subsection 6(5) of the Act does not often tell the whole story in any particular situation. Thus, to assist in reaching my conclusion on the issue of confusion, I will examine a number of the other surrounding circumstances that were raised by the facts of this case.
a) Decision of the Trade-marks Opposition Board
[54] The Opposition Board released the Opposition Decision, supra on October 1, 1997. That proceeding involved the same parties and the same trade-marks as are before me in the present case. In its decision, the Opposition Board refused the Defendant's application for the trade-mark NUTRAVITE on the basis that the Defendant had not established that there was no likelihood of confusion between its trade-mark and the NUTRILITE trade-mark of Amway (Alticor's predecessor in title to the trade-mark). In this case, the Plaintiffs submit that this Court should give significant weight to the Opposition Decision when considering the likelihood of confusion. In their view, since the Opposition Board has determined that there is a likelihood of confusion between the trade-marks, so should this Court. There are a number of reasons why I cannot accept this argument.
[55] First, the Plaintiffs in this action bear the burden of proof (Canadian Memorial Services, supra). Whereas the Opposition Board placed the burden on the Defendant to show, on a balance of probabilities, that there was no reasonable likelihood of confusion, the burden in this case remains throughout with the Plaintiffs to convince me, on a balance of probabilities, that there is a reasonable likelihood of confusion. In light of the reasons of the Opposition Board, that difference is a critical one. Having considered all of the evidence before it, the Opposition Board reached the following conclusion:
Considering all of the above, I find that I am in a state of doubt whether the applied for mark NUTRAVITE would be confusing with the opponent's mark NUTRILITE. Given that the legal onus is on the applicant to show, on a balance of probabilities, that there is no reasonable likelihood of confusion, such doubt must be resolved against the applicant. (The Opposition Decision, supra at 285) [Emphasis added]
[56] One presumes from this statement that, if the Opposition Board had been of the view that the burden was on the opponent in the case, the doubt would be resolved against the opponent rather that the applicant. Thus, where I am faced with a situation where the onus is unarguably on the Plaintiffs, a state of doubt would result in a determination in favour of the Defendant. Accordingly, if I were to place any weight on the Opposition Decision, it would act in favour of the Defendant.
[57] However, I believe that the Opposition Board's final determination should be accorded little weight. The Opposition Board, although applying the same provisions of subsection 6(5) of the Act regarding confusion, had before it a different record and was making a different determination with a different burden of proof. The decision cannot, in my view, be relied on in these proceedings. Further, I am not in a position to review that tribunal's decision. My task in this action is to make my findings and reach my conclusions on the basis of the evidence before me and on my analysis of the applicable law. Accordingly, even though the parties and the issue of confusion are the same as before me in this case, I do not intend to defer to the Opposition Board in reaching my own conclusions in this case.
[58] In summary on this point, the decision of the Opposition Board is not, in my view, a relevant surrounding circumstance or, if it is, it does not favour the Plaintiffs.
b) Use of NUTR
[59] The presence of a common element in trade-marks has an important bearing on the issue of confusion. In Kellogg Salada Canada Inc. v. Maximum Nutrition Ltd. (1992), 43 C.P.R. (3d) 349 (F.C.A.), the Court of Appeal allowed an appeal of a decision of a trial judge who had upheld decisions of the Opposition Board. Those originating decisions gave effect to the oppositions to the use of the trade-mark NUTRI-VITE by the holders of the registered trade-marks NUTRI-MAX and NUTRI-FIBRE. Having determined that none of the marks were inherently distinctive, the Court concluded that, "[W]here marks possess little or no inherent distinctiveness, as is pointed out in Fox [The Canadian Law of Trade Marks and Unfair Competition, 3rd ed. (Toronto: Carswell, 1972) at 152-3] "small differences will serve to distinguish" (Kellogg, supra at 359). Further, the Court stated that:
. . . consumers of these products are accustomed to making fine distinctions between the various NUTRI trade marks in the market-place, by paying more attention to any small differences between marks (Kellogg, supra at 360).
[60] Other authorities support this view (see for example, Office Cleaning Services, Ltd. v. Westminster Window and General Cleaners, Ltd., (1946) 63 R.P.C. 39 at 43 (H.L.)). Evidence of widespread use of all or part of a mark has been accepted "to mitigate the significance of resemblance under paragraph 6(5)(e) on the basis that widespread use must infer that the marketplace is able to distinguish between the competing marks" (Polo Ralph Lauren, supra at para. 23). It has been said that a party who "chooses to use a suggestive non-distinctive name, regardless of any acquired distinctiveness, ... must accept a certain amount of confusion without sanction" (Man and His Home Ltd. v. Mansoor Electronics Ltd. (1999), 87 C.P.R. (3d) 218 at 224 (F.C.T.D.)).
[61] Applying these concepts to the case before me, it becomes necessary to consider evidence on the existence of other products starting with NUTR. If I can conclude that there is widespread use of NUTR in the relevant marketplace, there is a consequential impact on our hypothetical consumer-the one with an imperfect recollection of the NUTRILITE brand. Logically, such a consumer sees many brands of products beginning with NUTR and would examine more closely the container of NUTRAVITE to discern the small differences between the two brands.
[62] There was extensive evidence before me of the availability in Canada of products starting with the letters NUTR. At least 81 products associated with the general class of supplements and other health-related products and with the prefix NUTR are available in the marketplace. Of those 81 products, 38 would be considered to be vitamin, mineral or herbal supplements. For the most part these products were identified by witnesses of the Defendant who were asked to go on shopping expeditions. On most of their outings, the store in question carried a range of NUTR products in fairly close proximity (for example, in the pharmacy section of a Walmart store, or in a small health food store).
[63] The Plaintiffs submit that the state of the marketplace should be looked at restrictively. They argue that I should exclude from the NUTR analysis all but the products that are vitamin, mineral and herbal supplements in tablet or capsule form. In their submission, I should not consider any NUTR products that are not directly associated with the same wares. If I do that, I am left with only a few products. I cannot accept this narrow restriction. As described by Mr. Kent Macleod, the owner of Nutri-Chem Pharmacy, the NUTR products within the marketplace are not separated by any great distance on the shelves of the stores where they appear. On every shopping trip for vitamins, the consumer is faced with a variety of NUTR products in tablet, capsule and other forms.
[64] Further, I think that the Plaintiffs' argument misses the point to be made. The important point is that consumers, having been inundated with NUTR products of all types, have learned that they must read the brand names carefully to determine what they are buying. Whether the product is a bottle of vitamin pills or a nutritional bar or a hair care product, the consumer has become accustomed to looking for minor differences. If the bottle in their hands is one directly associated with nutrition, such as vitamin, mineral or herbal supplements, my view is that the consumer will be even more vigilant in discriminating. Hence, I have no difficulty in finding that, given the large number of NUTR products in the marketplace, consumers are able to distinguish products on the basis of small differences. That, in turn, mitigates the significance of resemblance of the NUTRILITE trade-mark from the NUTRAVITE trade-mark under paragraph 6(5)(e).
[65] The Defendants also proffered the affidavit evidence of Ms. Linda Elford as evidence of the state of the marketplace. Ms. Elford is the owner of Trade Mark Reflections Ltd., a company that conducts searches in the records of the Trade-marks Office on a regular basis. She was asked by the Defendant to carry out trade-mark searches in respect of this litigation. The results of her searches, as set out in her affidavit, are that there are 34 registrations for trade-marks with the prefix NUTR for use in association with vitamin, mineral and herbal supplements. Another 52 registrations fall within the category of health-related products and 82 within the general class of food products including nutritional supplements. This evidence adds to or corroborates the conclusion that the NUTR prefix is extremely common.
[66] The Plaintiffs object to the admission of this evidence by way of affidavit on the basis that such evidence is not the "best evidence". In their view, only the certified copies of each NUTR registration would be admissible. This argument, in my view, puts form over substance.
[67] Justice Tremblay-Lamer faced the same issue of the admissibility of non-certified copies in ITV Technologies, supra. In rejecting the argument that uncertified copies of certain documents should not be admitted, she stated at para. 20:
The modern common law, statutory provisions, rules of practice and modern technology, have rendered the [best evidence] rule obsolete in most cases and the question is one of weight and not admissibility.
I agree.
[68] In this case, adhering to a strict rule would cause the Defendant to incur great expense for little, if any, advantage to this Court. The affidavit evidence of Ms. Elford is not provided as proof of any particular registration, but as evidence of the proliferation of NUTR in trade-marks. I am prepared to admit the evidence for proof of the fact that there are many trade-mark registrations that include the prefix NUTR.
c) Co-existence of trade-marks
[69] In spite of 10 years of co-existence, no evidence of even a single instance of confusion of the two trade-marks was presented. The record consists of more than a failure of the Plaintiffs to come up with any instance of confusion; there is actual positive evidence in this regard. The testimony of Mr. Farid Ibrahim, the President and CEO of the Defendant, was that, to his knowledge, his company has never been approached to buy any other products starting with NUTR. Of even more significance were the comments of Mr. Kent Macleod, the owner of Nutri-Chem Pharmacy where Nutravite products are sold. Mr. Macleod has been in the pharmacy business since 1980. His evidence was that, until this litigation, he had not heard of the NUTRILITE brand. I draw a strong inference from the statements of Mr. Macleod and Mr. Ibrahim that there have been no instances of actual confusion of the two trade-marks.
[70] I agree with the Plaintiffs that evidence that marks have co-existed for some time without apparent confusion is not conclusive that the marks are not likely to be confused (Mr. Submarine, supra at 9 and 14). However, in this case, the testimony of Mr. Macleod and Mr. Ibrahim points to an unlikelihood of confusion. Once such evidence is raised, the comments of Justice Décary in the Federal Court of Appeal decision in Dion Neckwear Ltd. v. Christian Dior, S.A. (2002), 20 C.P.R. (4th) 155 at para. 164 are instructive:
While the relevant issue is "likelihood of confusion" and not "actual confusion", the lack of "actual confusion" is a factor which the courts have found of significance when determining the "likelihood of confusion". An adverse inference may be drawn when concurrent use on the evidence is extensive, yet no evidence of confusion has been given by the opponent. [citations omitted]
[71] The only evidence that was presented in this case that could counter the inferences I have drawn is the survey evidence. Such evidence of actual confusion was presented by Dr. Ruth M. Corbin. Dr. Corbin is a survey expert with exemplary credentials and considerable experience in market research and analysis. Is this evidence sufficient? I do not think so. I turn now to a discussion and analysis of the survey evidence submitted by the Plaintiffs.
[72] Dr. Corbin was asked to measure the extent, if any, to which IBOs who claimed to be aware of a vitamin supplement product with the brand name NUTRAVITE would misapprehend or perceive it as a product of Alticor (i.e. NUTRILITE). Two surveys were produced:
1. The first survey consisted of telephone interviews with 201 randomly selected IBOs across Canada (excluding Quebec). It measured the aural and, to a limited extent, the visual perception of the brand name NUTRAVITE by spelling out the trade-mark.
2. The second survey consisted of 606 telephone interviews with randomly selected IBOs and measured aural perception only.
[73] In both surveys, four identical sets of questions were asked about four different vitamin, mineral or herbal supplement brand names: NUTRAVITE, Vitalife, Nutrisport and Holista. Questions about supplement brand names other than NUTRAVITE acted as control conditions to measure the possibility that respondents would identify these as Alticor products for reasons unrelated to the name NUTRAVITE. Dr. Corbin concluded that there is a statistically significant misapprehension that NUTRAVITE brand products originate with Alticor. IBOs confused the NUTRAVITE product with Altictor's NUTRILITE product. She stated her results as follows:
· 14% of IBOs claimed to be aware of NUTRAVITE;
· 36% of IBOS who claimed awareness in the second survey believed it to be a product of Alticor;
· 22% of IBOs who claimed recognition in the first survey believed it to be a product of Alticor;
· 97% of those who claimed to know the source of NUTRAVITE (32 out of 33 IBOs) across both surveys identified it as a product of Alticor.
[74] Dr. Chuck Chakrapani appeared on behalf of the Defendant and was asked to evaluate Dr. Corbin's surveys to see whether they support her conclusion of confusion. In his view, they do not. His first objection was to Dr. Corbin's target population. Further, Dr. Chakrapani believes that, if Dr. Corbin's studies are relied upon by this Court, they do not support a finding of substantial confusion.
[75] Both experts agree that in a trade-mark dispute over the likelihood of confusion, the pertinent population is defined as follows:
The relevant segment of the population must have had some exposure to the plaintiff's mark, and should be assessed in terms of likelihood of confusion on the basis of their first impression from people who would possibly purchase (or influence the purchase of) the goods and services of both parties. (Corbin, R. R.S. Jolliffe & A.K. Gill, Trial by Survey:Survey Evidence and the Law. (Toronto: Carswell Thomson Professional Publishing, 2000) at 17)
Based on this definition, despite Dr. Chakrapani's reservations, I am satisfied that Dr. Corbin's surveys involved a pertinent population. Through the information that all IBOs receive upon registration, it would be highly unlikely that the IBOs are unaware of the NUTRILITE brand. A question to confirm this was not necessary.
[76] A more substantive and supportable criticism by Dr. Chakrapani was that the first impression of the majority of respondents did not factor into Dr. Corbin's results. This is because only those respondents who claimed to have knowledge of the brand name NUTRAVITE were asked further questions. Those who claimed no such knowledge were not interviewed further and, more critically, were not factored into the final statistical conclusion. Dr. Chakrapani stated that these respondents ought to have been counted, as their first impression of the NUTRAVITE trade-mark was that they did not know it, meaning they definitely did not confuse it with NUTRILITE.
[77] With respect to Dr. Corbin's surveys, this logic seems unassailable. All respondents who answered 'no' to the following questions should be counted as respondents who did not confuse the brands NUTRAVITE and NUTRILITE:
1. Are you aware or not of any vitamin, mineral or herbal supplements with the brand name Nutravite, spelled N-U-T-R-A-V-I-T-E? (First survey)
2. Are you aware or not of any vitamin, mineral or herbal supplements with the brand name Nutravite? (Second survey)
[78] When respondents who answered 'no' to these questions were counted, Dr. Corbin's results become the following:
First Survey Second Survey
Total number interviewed 201 606
Judged to be "confused" 6 30
Per cent "confused" 3.0% 5.0%
Margin of error 2.4% 1.7%
[79] Given these low percentages and large margins of error, Dr. Corbin's surveys show that only a very small, albeit still statistically significant, portion of the population interviewed were "confused" between the two trade-marks. A small but statistically significant portion of the pertinent population might, in some circumstances, be sufficient to support a finding of confusion. Here, however, there are other factors which, in my view, point to according the surveys less weight.
2. The surveys excluded all IBOs in Quebec. It may be that the survey results would be the same if a second language survey were to be carried out. But I do not know that.
3. Being carried out exclusively by telephone, the surveys were very limited in scope. The respondents were not shown the word NUTRAVITE. In a real life situation, the consumer with an imperfect recollection would be faced with a visual portrayal of the trade-mark. The surveys, while likely valid for their limited purposes, did not test the likelihood of confusion of a consumer who is looking at the word NUTRAVITE.
[84] In summary on this point, I find that, in spite of ten years of co-existence, there have been no actual instances of confusion. Further, the Plaintiffs' surveys do not support a conclusion that there is likely to be confusion between the two trade-marks. These findings weigh in favour of the Defendant.
e) Acquiescence to use of trade-mark
[85] The Defendant submits that the Plaintiffs, through their actions, have acquiesced to the Defendant's use of the trade-mark and should be estopped from asserting their rights in this claim. In particular, the Defendant points to the fact that the Plaintiffs did not request that the Defendant cease using the trade-mark NUTRAVITE and delayed commencing the present action until 1999. I do not agree.
[86] Courts have found that the doctrine of estoppel by acquiescence applies in certain situations where a party has, through inaction, failed to assert its rights and allowed another to use the same rights. The authorities, however, make it clear that mere delay will not support such a claim (Canadian Memorial Services, supra at para. 50 (F.C.T.D.)).
[87] This is not a case where the holder of the rights sat by without any action whatsoever for a lengthy period of time. The Plaintiffs first became aware of the Defendant's use of its trade-mark NUTRAVITE when the trade-mark application for NUTRAVITE was advertised in the Trade-marks Journal in 1994. Thereafter, they pursued their claim to the NUTRILITE trade-mark through vigorous opposition to the registration of the trade-mark by the Defendant. Its intervention before the Opposition Board commenced on February 8, 1994 and was only completed with the decision of the Opposition Board in late 1997. Thus, if there was any delay in asserting their trade-mark rights, it was less than two years. In my view, this delay is insufficient to give rise to estoppel by acquiescence.
f) Plaintiffs' position in retail market
[88] Dr. Ida Berger appeared as a marketing expert on behalf of the Plaintiffs. Dr. Berger, a Professor of Marketing at Ryerson University in Toronto, was asked to determine whether the Plaintiffs would be particularly disadvantaged by late entry into the retail food supplements market after NUTRAVITE. Her conclusion was that the Plaintiffs will be particularly disadvantaged in the market, unless they can leverage their reputation to gain a competitive advantage. Dr. Berger admitted that it is not always possible to predict how a late entrant will fare, that there are exceptions, and that late entry can be a strategic business decision.
[89] Three material issues arose with respect to Dr. Berger's evidence. First, her study assumes that the Plaintiffs' products can and will be sold through retail channels. This is a matter that has been discussed in greater detail elsewhere and goes to the relevance of Dr. Berger's evidence. Second, I question whether Dr. Berger's evidence speaks directly to the issue of confusion, which is the issue before me. Third, Dr. Berger agreed on cross-examination that the Plaintiffs could overcome a late entry disadvantage by leveraging their reputation. The Plaintiffs claim that they have been in the supplements business for over 50 years and that they sell the most trusted brand of supplements on the market. For this reason, even if Dr. Berger's evidence is relevant, it should be accorded little weight, if any at all.
4. Conclusion
[90] As indicated earlier, the factors in subsection 6(5) of the Act need not be attributed equal weight. In my view, the factor that warrants the greatest emphasis in this case is the nature of the trade. Combining this factor with the surrounding circumstances of the presence of a commonly-used prefix, NUTRI, at the beginning of the trade-mark and co-existence of the two trade-marks for over ten years without confusion, leads to the conclusion that the Plaintiffs have not discharged their burden of showing a likelihood of confusion between the two trademarks. In other words, an average consumer having a vague or imperfect recollection of the NUTRILITE trade-mark upon encountering a NUTRAVITE product, would not infer that the NUTRAVITE product is associated with NUTRILITE brand products.
[91] Having had regard to all of the surrounding circumstances including those enumerated in subsection 6(5) of the Act, I find that use of the NUTRAVITE trade-mark is not likely to lead to the inference that NUTRAVITE products and NUTRILITE products are sold by the same person. Accordingly, NUTRAVITE is not a confusing trade-mark and there has been no infringement of the NUTRILITE trade-mark.
Issue #3: Passing Off
[92] The Plaintiffs submit that, by sale and distribution of its vitamin, mineral and herbal supplements, the Defendant has directed public attention to its wares or business in such a way as to cause or be likely to cause confusion between such wares or business of either of the Plaintiffs, contrary to subsection 7(b) of the Act. Subsection 7(b) is the codification of the common law tort of passing off. In particular, the Plaintiffs' claim relates to the Defendant's use of the trade-mark A PERFECT BLEND OF SCIENCE AND NATURE on its products. On their product labels, the Plaintiffs use the trade-mark NUTRILITE with the trade-mark THE BEST OF NATURE - THE BEST OF SCIENCE.
[93] The Defendant admitted using the trade-mark A PERFECT BLEND OF SCIENCE AND NATURE in respect of certain of its vitamin, mineral and herbal supplement products in or around December 1998. The use was rather limited. In December 1998, the phrase was included in a television commercial for the Defendant's products. The mark was never printed on a bottle or container of the products. However, it appeared on a hang tag or coupon that I assume was tied to the NUTRAVITE container for a period of time from December 1998 to December 1999. In early 1999, the mark was also used in an advertisement in "Healthy Living" magazine.
[94] The Defendant stopped using the phrase A PERFECT BLEND OF SCIENCE AND NATURE in late 1999. When asked why the company would no longer use the trade-mark, the response was, "Because the Plaintiff has laid claim to it and we don't want to infringe on the Plaintiff's rights". The Plaintiffs rely heavily on this admission of the Defendant in support of this claim of passing off. They further submit that such use was clearly intended to lead the public to believe that the products offered by the Defendant were the products offered by the Plaintiffs. I am unable to make the huge logical leap from the Defendant's admission to a conclusion that the Defendant "clearly intended" to mislead the public. Further, I am not persuaded that there is any merit in the claim of passing off in this case.
[95] The law of passing off can be stated succinctly as "no man may pass off his goods as those of another" (Ciba-Geigy Canada Ltd. v. Apotex Inc. (1992), 44 C.P.R. (3d) 289 at 297(S.C.C.), citing Lord Oliver in Reckitt & Colman Products Ltd. v. Borden Inc., [1990] 1 All E.R. 873 at 880 (H.L.)). As set out by the Supreme Court of Canada in Ciba-Geigy, supra, the three necessary components of a passing off action are:
96. the existence of goodwill;
97. deception of the public due to a misrepresentation; and,
98. actual or potential damage to the plaintiff.
[96] Use of the trade-mark BEST OF NATURE-BEST OF SCIENCE has not been a prominent part of NUTRILITE marketing. For example, a package of the Plaintiffs' biggest seller-NUTRILITE Double X-tendered as evidence in this proceeding, does not contain the phrase. Only two products were identified as carrying the trade-mark- NUTRILITE Sal Palmetto and Nettle Root and NUTRILITE Glucosamine Complex. When included on a product, it is located in small print on the side of the bottles or packaging. Further, it does not always conform exactly to the trade-mark. On the website, the phrase is used in at least two different ways: firstly, as BEST OF NATURE, BEST OF SCIENCE; and, secondly, as NUTRILITE: THE BEST OF NATURE. THE BEST OF SCIENCE. On the website, it is this second phrase that is identified as the registered trade-mark. In promotional materials where it appears, the phrase is used with a period as BEST OF NATURE. BEST OF SCIENCE. Admittedly, these are minor differences but, in the context of trade-mark law and of the powerful rights that accrue to the owner of a registered trade-mark, it appears to me that using different configurations is a significant departure. If the owner of the rights cannot bother to reproduce the trade-mark consistently and prominently, why should this Court intervene?
[97] In any event, when I turn my mind to the test, I find that the Plaintiffs have failed to establish the elements of a passing off action. I question first whether goodwill could be established for a mark that is used inconsistently and without active promotion. Secondly, I cannot accept that the Defendant's admission that it stopped using the trade-mark "because the Plaintiff has laid claim to it and we don't want to infringe on the Plaintiffs' rights" can be construed as an admission that the Defendant was using the mark to trick consumers into thinking that it sells a NUTRILITE product. Thirdly, there was no evidence of actual damage to the Plaintiffs and, since the Defendant stopped using the mark over three years ago and does not intend to use it again, there can be no potential for damages.
[98] For these reasons, I find that the Defendant did not direct public attention to his wares or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced directing attention to them, between his wares or business and the wares or business of the Plaintiffs. There has been no breach of subsection 7(b) of the Act and the Plaintiffs' claim fails.
Summary
[99] As a result of my conclusion in this matter, the relief requested by both the Plaintiffs and the Defendant is denied.
[100] Pursuant to a bifurcation order dated November 26, 2001, the issues of the extent of infringement, damages and profits were to be determined after trial. In view of the failure of the Plaintiffs' claims, there will be no need to pursue those issues.
[101] As no submissions on costs have been made, the issue of costs will be considered on the basis of written representations. In the event that the parties cannot agree on the costs in this matter, they will have until March 3, 2004 to make submissions on costs and until March 17, 2004 to reply.
ORDER
THIS COURT ORDERS THAT:
1. the Plaintiffs' claim is dismissed;
2. the Defendant's counterclaim is dismissed; and,
3. the Parties shall have until March 3, 2004 to make submissions with respect to costs and until March 17, 2004 to reply.
"Judith A. Snider"
Judge
Appendix A
Predecessors to Plaintiffs and Related Entities
Mytinger & Casselberry, Inc. ("M & C") - exclusive distributor of Nutrilite products from 1948 till 1963. In 1960, M & C changed its name to Mytinger Corporation.
Nutrilite Pharmaceuticals Inc. ("NPI") - acquired Mytinger Corporation and became the exclusive distributor of Nutrilite products. NPI became a division of Amway in 1976.
Amway Global, Inc. ("Amway") - U.S. corporation that acquired controlling interest in NPI in 1972 and became exclusive distributor of Nutrilite products. Amway became the holder of the Nutrilite mark in 1976.
Amway of Canada, Ltd. ("Amway of Canada) - was incorporated in Ontario in 1962 and started distributing Nutrilite products in Canada some time after 1972. Amway Global was the sole shareholder.
Alticor Inc. ("Alticor") - Amway changes its name to Alticor in October 2000. It is a U.S. corporation that, through its subsidiaries, sells inter alia Nutrilite products that are manufactured on its behalf. Alticor is the holder of the NUTRILITE mark.
Alticor's Present Family of Companies:
Quixtar Canada Corporation ("Quixtar") - Amway of Canada absorbed into Quixtar, an Ontario corporation that is the exclusive distributor of Nutrilite products in Canada.
Access Business Group LLC ("ABG") - U.S. limited liability corporation that came into existence in November 2000. It manufactures Nutrilite products for Alticor.
Access Business Group International LLC ("ABGIL") - wholly owned subsidiary of ABG.
Nutrilite Health Institute - division of ABG
Quixtar Investments, Inc. ("Quixtar Investments") - U.S. corporation that came into existence in July 1999. Quixtar is a wholly owned subsidiary of it.
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1489-99
STYLE OF CAUSE: ALTICOR INC. et al v.
NUTRAVITE PHARMACEUTICALS INC.
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: January 12, 2004 to January 23, 2004
REASONS FOR : The Honourable Madam Justice Snider
APPEARANCES:
Ms. D. Cornish
Ms. J. A. Ross Carrière FOR THE PLAINTIFFS
Mr. M. Gallie
Mr. M. B. Charness
Mr. J. Lucien FOR THE DEFENDANT
SOLICITORS OF RECORD:
RIDOUT & MAYBEE LLP
Ottawa Ontario FOR THE PLAINTIFFS
OSLER HOSKIN HARCOURT
Ottawa Ontario FOR THE DEFENDANT