Federal Court Decisions

Date: 20001110

Docket: T-2814-94

Ottawa, Ontario, this 10th day of November, 2000

PRESENT:      THE HONOURABLE MR. JUSTICE JOHN A. O'KEEFE

BETWEEN:

    

SPRINT COMMUNICATIONS COMPANY LP

SPRINT CANADA INC.

CALL-NET ENTERPRISES INC.

Plaintiffs

- and -

MERLIN INTERNATIONAL COMMUNICATIONS INC.

Defendant

REASONS FOR ORDER AND ORDER

O'KEEFE J.

[1]          By its Amended Revised Statement of Claim amended April 18, 2000, the plaintiffs ("Sprint") claim the following relief:

4. .      (a)      interim, interlocutory, and permanent injunctions restraining the Defendant, by its directors, officers, employees, agents or otherwise from:
   

i.          making false and misleading statements which tend to discredit the business or services of any of the Plaintiffs, contrary to Section 7(a) of the Trade-marks Act;

ii.          using any of the SPRINT Trade Marks in a manner likely to have the effect of depreciating the value of the goodwill attaching thereto, contrary to Section 22 of the Trade-marks Act;

iii.          making accusations that the plaintiffs Sprint Canada and Call-Net are illegally using the name Sprint Canada or any of the SPRINT Trade Marks, by way of statements, writings or other communications to actual or potential customers, suppliers, or other companies or individuals with whom the said plaintiffs do business or place advertising;

iv.          threatening customers, suppliers or other companies or individuals with whom the Plaintiffs Sprint Canada and Call-Net do business or place advertising, with legal action as a consequence of their accepting, advertising or doing business with the Plaintiff Sprint Canada under its name Sprint Canada or in association with any of the SPRINT Trade Marks;

v.          infringing any of the Plaintiffs' registrations Nos. TMA 300,027, TMA 414,722, TMA 418,135, TMA 398,590, TMA 423,517 on a quia timet basis;

vi.          directing public attention to its services or business in the manner which causes or is likely to cause confusion with the services or business of any of the Plaintiffs, contrary to Section 7(b) of the Trade-marks Act on a quia timet basis;

vii.          passing off its services or business as and for those of the Plaintiffs, contrary to Section 7(c) of the Trade-marks Act;

viii.          adopting any domain name in Canada which is confusing with any of the Plaintiffs' Sprint L.P.'s registered trade-marks, set out in paragraphs 5 and 19 of this Statement of Claim.

(b)          an order requiring the Defendant to issue written retractions and apologies to all customers, suppliers, or third parties with whom any of the Plaintiffs do business in relation to whom the Defendant has carried out the activities referred to in paragraphs 12-21 above;

     (c)          damages for:

i.          the making of false and misleading statements which have tended to discredit the business or services of the Plaintiffs;

ii.          the use of the SPRINT Trade Marks in a manner which has depreciated the value of the goodwill attaching thereto;

     iii.          trade mark infringement;

     iv.          passing-off;

(d)          in the alternative to paragraph (c) above, an accounting of profits made by the Defendant as a result of their infringing activities as aforesaid, as the Plaintiffs may elect;

     (e)          punitive, aggravated, and exemplary damages;

     (f)          pre- and post-judgment interest;

(g)          the plaintiffs' costs of this action, calculated on a solicitor and own client scale;

(h)          GST, as may be applicable on any award of damages, profits, interest or costs made by this Honourable Court;

(i)          such further and other relief as this Honourable Court may deem just.

[2]      At the trial of the matter, the plaintiffs' counsel informed the Court that the claims

in paragraph 26(a)(vi), (vii) and 26(b) were not being pursued. As well, he pointed out that counsel reached agreement on paragraphs 26(a)(i), (a)(iii) and (iv).

[3]      The defendant filed a counterclaim which claimed the following:

45. .          Defendant states that having regard to the allegations made in the          Amended Statement of Claim, it is a person interested in the validity of registrations Nos. 414,722, 418,135, 398,590 and 423,517.
    
46. .          Said registrations are invalid given the prior use of the trade mark SPRINT CANADA by Defendant and also due to the fact that they were not registrable at the time the application was made given the existence of several Canadian trade mark registrations encompassing the word Sprint at all relevant times.
    
    

     DEFENDANT PRAYS THIS HONOURABLE COURT [sic]:

     DISMISS Plaintiffs' Amended Statement of Claim;

     GRANT Defendant's Amended Statement of Defence and Cross-Claim;

ORDER that Canadian trade mark registrations 414,722, 418,135, 398,590 and 423,517 be expunged and struck out of the entry in the Register of trade marks;

     THE WHOLE with costs, including costs of exhibits and expertise;

[4]      The parties filed a joint statement of facts which reads as follows:

JOINT STATEMENT OF FACTS

     The Plaintiff, Sprint Communications Company L.P. (Hereinafter "Sprint L.P.") is a limited partnership organized and existing under the laws of the State of Delaware, United States of America, and has a principal office or place of business at 8140 Ward Parkway, Kansas, Missouri, U.S.A.

     The Plaintiff, Sprint Canada, Inc. (hereinafter "Sprint Canada") is a corporation organized and existing under the laws of Canada, and has an address or principal place of business at 105 Gordon Baker Road, Willowdale, Ontario M2H 3P8.

     The Plaintiff, Call-Net Enterprises Inc. (hereinafter "Call-Net") is a corporation organized and existing under the laws of Canada, and has a principal office or place of business at 105 Gordon Baker Road, Willowdale, Ontario M2H 3P8.

     The Plaintiff Sprint L.P. is the owner of the trade marks SPRINT, SPRINT EXPRESS, SPRINTNET, and US SPRINT, (hereinafter the "SPRINT TRADE MARKS") which have been registered in Canada for the wares and services recited in the registrations, summarized in part below:

TRADE MARK	REG'N NO./DATE	WARES/SERVICES
SPRINT	TMA 300,027 Registered: February 15, 1985	Communications services, namely, providing a telecommunications network for use by others.
SPRINT	TMA 414,722 Registered: July 23, 1993	(1) Toy communication devices, namely, walkie talkies and headsets.
SPRINT EXPRESS	TMA 418,135 Registered: October 15, 1993	(1) Telecommunication services, namely, implementing, operating and providing voice, data and video related telecommunication services.
SPRINTNET	TMA 398,590 Registered: May 22, 1992	(1) Telecommunication services, namely, implementing, operating and providing voice, data and video related telecommunication services
US SPRINT	TMA 423,517 Registered: February 25, 1994	Telecommunications Services

     Since at least as early as January 1, 1985, Sprint L.P., and its predecessors in title, have used the SPRINT trade mark in Canada, either themselves, or through affiliates, subsidiaries, and licensees, all of which have been licensed to use the trade mark by or with the authority of Sprint L.P. in Canada under which Sprint L.P. has direct or indirect control of the character of quality of the relevant wares and services (hereinafter "The Sprint Companies"). At all material times, all the use, advertisement or display of the SPRINT trade mark by The Sprint Companies is deemed to have the same effect as by the trade mark owner Sprint L.P.

     From at least as early as January 1, 1985 The Sprint Companies have used the SPRINT trade mark in Canada in association with the services of providing private telephone lines for voice and data communications for a number of major Canadian and non-Canadian corporations such as banks and insurance companies to interconnect their Canadian and U.S. offices.

     From at least as early as January 1, 1985, The Sprint Companies have used the SPRINT trade mark in Canada by providing telephone interconnect services to various Canadian telephone companies, including Bell Canada and Unitel, to enable Canadian customers to telephone the United States, and for United States customers to telephone Canada.

     Since at least as early as 1986, The Sprint Companies have participated as exhibitors at the annual CBTA Show, which is the major Canadian trade show for the telecommunications industry. The CBTA Show is held annually across Canada in major cities such as Toronto, Montreal, and Vancouver. Generally, attendees are a broad spectrum of business people, including businesses seeking to purchase telecommunications services.

     On or about October 1, 1993, Call-Net and Sprint Canada became licensed to use the SPRINT TRADE MARKS in Canada, and thereby each became one of The Sprint Companies in accordance with paragraph 5 above.

     Sprint Canada is a wholly-owned subsidiary of Call-Net, and has been Call-Net's main operating company at all material times. At all material times Call-Net has been a holding company and has not itself offered or sold services. Rather it has done so through Sprint Canada.

     Commencing on or about October 1, 1993, Sprint Canada commenced use of the SPRINT trade mark in Canada, including Quebec, in association with long distance telephone services to Canadian businesses and Canadian consumers. Late in 1994 Sprint Canada commenced providing toll free long distance telephone services to businesses, whereby customers of the business (including consumers) could contact the business toll free (1-800 service). As part of its telecommunications services, Sprint Canada has since October 1993 provided its business customers with telecommunications cost reports and analysis for the management of the customers' telecommunications expenses.

     Sprint Canada's sales and customer base where indicated (business and residential) for its long distance telephone services in association with the trade mark SPRINT in Canada at calendar year end have been approximately as follows: 1994 - $175 million, 27,000 business customers, 225,000 residential customers; 1995 - $455 million; 1996 - $710 million, 60,000 business customers, 820,000 residential customers; 1997 - $920 million, 1.2 million combined business and residential customers, with over 1 million residential customers.

     Starting in October of 1993 to the end of 1994, and in each calendar year thereafter, Sprint Canada has spent at least $10 million annually on television, newspaper, magazine, and direct mail advertising in Canada (including in Quebec), promoting its long distance telephone services in association with the trade mark SPRINT. During that time Sprint Canada has also engaged in telemarketing in Canada of its long distance telephone services in association with the trade mark SPRINT.

     By October 1, 1994, the trade mark SPRINT had become well-known in Canada among businesses and consumers, including among the defendant's customers and potential customers, as denoting the long distance telephone services of the plaintiffs.

     Sprint Canada's television advertising commenced in July 1994 in Canada (including Quebec). Sprint Canada's television advertising from 1994 to 1998 is as shown in the video tape which is Production No. 4 from its Affidavit of Documents. The French language television advertising aired in Quebec.

     Samples of Sprint Canada's direct mail advertising distributed in Canada in the period October 1993 to 1998 are as shown in Production Nos. 7 and 8 from Sprint Canada's Affidavit of Documents.

     Samples of Sprint Canada's print advertising distributed in Canada in the period October 1993 to 1998 are as shown in Production No. 9 from Sprint Canada's Affidavit of Documents.

     Press coverage of The Sprint Companies in Canada has appeared in the following Canadian newspapers:

         Calgary Herald, 1994 - 1997

         Financial Post, 1992 - 1997

         Montreal Gazette, 1994 - 1997

         Ottawa Citizen, 1994 - 1997

         Toronto Star, 1993 - 1997

         Vancouver Sun, 1994 - 1996

Sprint Canada's Production No. 23 from its Affidavit of Documents setting out circulation figures for these newspapers is accurate in all material respects.

     Press coverage of The Sprint Companies in Canada has appeared in the Globe and Mail as follows: 78 articles comprising references to Sprint Canada, Sprint communications, Sprint Corp., and Call-Net, as listed in Production No. 21 from Sprint Canada's Affidavit of Documents, and samples of which from the period 1993 - 1997 are set out in Production No. 22 of Sprint Canada's Affidavit of Documents.

     Sprint Canada's Production No. 24 from its Affidavit of Documents setting out circulation figures for the Globe and Mail is accurate in all material respects.

     Searches of the Infomart Database and the Dialog Select data bases for press coverage in Canada of The Sprint Companies, set out in Production Nos. 10, 11, 12 and 13 of Sprint Canada's Affidavit of Documents, are accurate in all material respects.

     The defendant is in the communications business, namely providing marketing, advertising and public relations, and other services to businesses. This includes market planning and assessment (for example who the client's target customers are), developing advertising, implementing marketing plans for a client, and media planning and buying for the client's advertising.

     The defendant has at all material times had an intent to use the trade mark and trade name SPRINT CANADA in association with its business. The defendant intends to use the trade mark and trade name SPRINT CANADA in association with the defendant's business, if the plaintiffs are not successful in enjoining it from doing so.

     The defendant prepared and sent the letters in Call-Net's production 9 from its affidavit of documents on or about the dates stated on the letters, to the addressees stated thereon, and to those who according to the letters were copied on them, and the letters were received by the various recipients in the normal course shortly after the dates thereof. The letters are as follows:

October 5, 1994 to Mr. Juri Koor, President, Call-Net Enterprises Inc.;

October 12, 1994 to Mr. Colin Bates, Vice-President, Sprint Canada;

October 20, 1994 to Mr. Terry Ruffell, President, Canadian Professional Sales Association;

October 28, 1994, to Mr. Everett Elting, President, Grey Advertising Limited;

October 28, 1994, to Mr. David Harrison, President, Harrison, Young Pesonen & Newell Inc.;

October 28, 1994 to Mr. Keith Spicer, Chairman, Canadian Radio-Television and Telecommunication Commission;

November 4, 1994 to Mr. A.D. Pouliot, President and C.O.O., CFCF Inc.;

November 17, 1994 to Mr. Roger P. Parkinson, Publisher and Chief Executive Officer, The Globe and Mail;

November 18, 1994, to Mr. James K. Warrillow, President, Maclean Hunter Publishing Limited;

November 18, 1994 to Mr. Keith Spicer, Chairman, Canadian Radio-Television and Telecommunication Commission.

     The Canadian Professional Sales Association, recipient of the defendant's October 20, 1994 letter, was in 1994 a trade organization whose members are made up mainly of sales representatives. At that time, the defendant was a member of the Canadian Professional Sales Association, and Sprint Canada had advertised its long distance telephone services in publications of the Canadian Professional Sales Association directed to its members, including the1994 Canadian Professional Sales Association Travel Directory. Ms. Gail Hekkema, who was copied on the defendant's October 20, 1994 letter, was the Quebec Regional Council Representative of the Canadian Professional Sales Association. In 1994, Sprint Canada had made an offer to members of the Canadian Professional Sales Association for telecommunications service which was endorsed by the Association, and to which the defendant objected as set out in its November 18, 1994 letter to Mr. Keith Spicer, Chairman, Canadian Radio-Television and Telecommunication Commission.

     Grey Advertising Limited, recipient of the defendant's October 28, 1994 letter, of whom Mr. Everett Elting was President, was in 1994 Sprint Canada's advertising agency, responsible for creation and development of Sprint Canada's television and other advertising.

     The recipient of the defendant's October 28, 1994 letter, Harrison, Young, Pesonen & Newell Inc., of whom Mr. David Harrison was President, was in 1994 responsible for media placement of Sprint Canada's television and other advertising. As a result of the defendant's October 28, 1994 letter, Call-Net provided a written Confirmation & Indemnity dated November 4, 1994 to Harrison, Young, Pesonen & Newell Inc., on behalf of Call-Net and on behalf of Sprint Canada to indemnify it in relation to the defendant's claim, which is produced in Call-Net's Production No. 10 from its Affidavit of Documents, together with a cover letter dated November 3, 1994 from Minden Gross Grafstein & Greenstein, solicitors for Harrison, Young, Pesonen & Newell Inc.

     The recipient of the defendant's November 4, 1994 letter, CFCF Inc., of whom Mr. A.D. Pouliot was President and C.O.O., was in 1994 a Montreal television station which had carried Sprint Canada's television advertising, which advertised and promoted its long distance telephone services.

     The recipient of the defendant's November 17, 1994 letter, The Globe and Mail, of which Mr. Roger P. Parkinson was Publisher and Chief Executive Officer, was at all material times distributed nationally throughout Canada, and had carried Sprint Canada's advertising which advertised and promoted its long distance telephone services.

     The recipient of the defendant's November 18, 1994 letter, Maclean Hunter Publishing Limited, of whom Mr. James K. Warrillow was President, was in 1994 the publisher of Maclean's Magazine, distributed nationally in Canada, and which had carried Sprint Canada's print advertising, promoting its long distance telephone services.

     The defendant received the letters dated November 4, 1994 and November 9, 1994 from Sprint L.P.'s solicitors, Shapiro, Cohen, Andres, Finalyson, and from Mark R. Hemingway, Legal Counsel of Sprint Canada Inc., Production No. 11 of Sprint L.P.'s Affidavit of Documents, in the normal course, shortly after the dates of the letters.

     On May 14, 1997, the defendant's President, Mr. Wayne Bryant, attended at the annual shareholders meeting of Call-Net. At the meeting Mr. Bryant asked questions of Mr. Juri Koor, Chief Executive Officer of Call-Net, and Mr. Jim Hardy, Chief Financial Officer in front of all those present, including shareholders and the financial press. Mr. Bryant introduced himself as the President of Sprint Canada. He indicated that he had the rights to use the name and trade mark "Sprint Canada" in Quebec, and he asked why no reference had been made to this in Call-Net's financial statements, and why no contingency had been provided for this in the company's financial statements. Mr. Bryant's remarks were the subject of commentary in an RBC Dominion Securities Analyst's Report dated May 15, 1997, Production No. 3 from Call-Net's Affidavit of Documents, which was circulated in Canada.

     After commencement of this action, the defendant registered "sprintcanada.com" as a domain name on the internet. Sprint L.P. complained to the defendant and to Network Solutions, which governs the registration of domain names in its capacity as the InterNIC Domain Name Registrar. By letter dated June 9, 1997 to Sprint L.P., produced in Item No. 6 of Sprint L.P.'s Affidavit of Documents, the defendant responded to Sprint L.P.'s complaint. Sprint L.P. is the owner of the trade marks SPRINT CANADA, and SPRINT CANADA & Design, in Canada, Registration Nos. 468,519, and 468,521 respectively. As a result in its accordance with its policy, Network Solutions required that the defendant either relinquish the domain name sprintcanada.com, or dispute the matter, and during the currency of the dispute register another domain name. During the currency of the dispute the domain name sprintcanada.com is not available to any of the plaintiffs, or any other party. The defendant chose the second option, and selected the alternate domain name "sprintus.com". Network Solutions has since reinstated the defendant's sprintcanada.com domain name. The plaintiffs were unaware of this until being informed by the defendant on April 27, 2000. The plaintiffs have no knowledge of the circumstances of the reinstatement. The plaintiffs are investigating and intend to take the matter up with Network Solutions as appropriate.

     Since 1996 Sprint Canada has operated a web site on the internet under the domain name sprintcanada.ca. Since 1995 Sprint L.P. has operated a web site on the internet using the domain name sprint.com. The respective web site of each of the companies describes its respective business and services, and in the case of Sprint Canada since 1997 has allowed consumers, small businesses, and other businesses to purchase long distance telephone services. In 1997 Sprint Canada commenced providing internet access services to Canadian consumers and businesses.

     The defendant admits the authenticity of the following documents: Copies of Sprint L.P.'s Canadian Trade Mark Registrations in Production No. 3 of Sprint L.P.'s Affidavit of Documents, itemized as follows:

     SPRINT, Registration No. TMA 300,027;

     SPRINT, Registration No. TMA 414,722;

     SPRINT EXPRESS, Registration No. TMA 418,135;

     SPRINTNET, Registration No. TMA 398,590

     US SPRINT, Registration No. TMA 423,517;

     SPRINT CANADA, Registration No. TMA 468,519;

     SPRINT CANADA & Design, Registration No. TMA 468,521;

     CARTESPRINT, Registration No. TMA 477,461;

     GLOBAL SPRINTFAX, Registration No. TMA 422,873;

     SPRINT CLARITY, Registration No. TMA 443,477;

     SPRINT QUICKCONFERENCE, Registration No. TMA 473,323;

     CONFERENCE SPRINT, Registration No. TMA 481,294

ISSUES

[5]      1.      Did the defendant infringe any trade-mark owned by the plaintiffs?

2.Should an injunction issue to restrain the defendant, by its directors,

officers, employees, agents or otherwise from using any of the SPRINT trade-marks in a manner likely to have the effect of depreciating the value of the goodwill attaching thereto, which is contrary to Section 22 of the Trade-marks Act, R.S.C. 1985, c. T-13 (the "Act")?

         Should an injunction issue to restrain the defendant, by its directors, officers, employees, agents or otherwise from infringing any of the plaintiffs' registrations Nos. TMA 300,027, TMA 414,722, TMA 418,135, TMA 398,590, TMA 423,517 on a quia timet basis?

         Should an injunction issue to restrain the defendant, by its directors, officers, employees, agents or otherwise from adopting any domain name in Canada which is confusing with any of the plaintiffs' Sprint L.P.'s registered trade-marks, set out in paragraphs 5 and 19 of the Statement of Claim?

         Are the plaintiffs entitled to damages for:

(a)      the making of false and misleading statements which have tended to discredit the business or services of the plaintiffs?

the use of the SPRINT trade-marks in a manner which has depreciated the value of the goodwill attaching thereto?

             trade-mark infringement?

             passing-off?

Are the plaintiffs entitled to punitive, aggravated and exemplary damages?

             Should pre-judgment and post-judgment interest be paid?

[6]      Issue 1

     Did the defendant infringe any trade-mark owned by the plaintiffs?

     In April, 1988 the defendant registered the name "Sprint Canada" as a trade name in the Prothonotary's Office in Montréal. In 1985, the plaintiff Sprint L.P. registered the trade-mark "SPRINT" (TMA 300,027) and by paragraphs 5 and 6 of the Joint Statement of Facts, the parties have agreed that the trade-mark has been used in Canada since January 1, 1985. In or about February, 1987 the defendant sent out a series of letters in which it referred to a division of the company as Sprint Canada. This was the "Coupons for Better Living" program. The letterhead had the name Spectrum Medical Market Consultants embossed on it in a bolder print than the words "Sprint Canada" which appeared on two of the three letters.

[7]      In order to obtain the relief requested, the plaintiffs must first satisfy the Court

that the conduct of the defendant amounted to infringement of its trade-mark rights. Section 20 of the Act reads:

Infringement 20. (1) The right of the owner of a registered trade-mark to its exclusive use shall be deemed to be infringed by a person not entitled to its use under this Act who sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name, but no registration of a trade-mark prevents a person from making (a) any bona fide use of his personal name as a trade-name, or (b) any bona fide use, other than as a trade-mark, (i) of the geographical name of his place of business, or (ii) of any accurate description of the character or quality of his wares or services, in such a manner as is not likely to have the effect of depreciating the value of the goodwill attaching to the trade-mark.

Violation 20. (1) Le droit du propriétaire d'une marque de commerce déposée à l'emploi exclusif de cette dernière est réputé être violé par une personne non admise à l'employer selon la présente loi et qui vend, distribue ou annonce des marchandises ou services en liaison avec une marque de commerce ou un nom commercial créant de la confusion. Toutefois, aucun enregistrement d'une marque de commerce ne peut empêcher une personne_: a) d'utiliser de bonne foi son nom personnel comme nom commercial; b) d'employer de bonne foi, autrement qu'à titre de marque de commerce_: (i) soit le nom géographique de son siège d'affaires, (ii) soit toute description exacte du genre ou de la qualité de ses marchandises ou services, d'une manière non susceptible d'entraîner la diminution de la valeur de l'achalandage attaché à la marque de commerce.

[8]      The real question now becomes whether the defendant's trade name was

confusing in relation to the plaintiffs' trade-marks. Section 6 of the Act sets out the statutory provisions with respect to confusion:

6(1) When mark or name confusing For the purposes of this Act, a trade-mark or trade-name is confusing with another trade-mark or trade-name if the use of the first mentioned trade-mark or trade-name would cause confusion with the last mentioned trade-mark or trade-name in the manner and circumstances described in this section. 6(2) Idem 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. 6(3) Idem The use of a trade-mark causes confusion with a trade-name if the use of both the trade-mark and trade-name in the same area would be likely to lead to the inference that the wares or services associated with the trade-mark and those associated with the business carried on under the trade-name are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class. 6(4) Idem The use of a trade-name causes confusion with a trade-mark if the use of both the trade-name and trade-mark in the same area would be likely to lead to the inference that the wares or services associated with the business carried on under the trade-name and those associated with the trade-mark are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.

6. (1) Quand une marque ou un nom crée de la confusion Pour l'application de la présente loi, une marque de commerce ou un nom commercial crée de la confusion avec une autre marque de commerce ou un autre nom commercial si l'emploi de la marque de commerce ou du nom commercial en premier lieu mentionnés cause de la confusion avec la marque de commerce ou le nom commercial en dernier lieu mentionnés, de la manière et dans les circonstances décrites au présent article. 6(2) Idem 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. 6(3) Idem L'emploi d'une marque de commerce crée de la confusion avec un nom commercial, lorsque l'emploi des deux dans la même région serait susceptible de faire conclure que les marchandises liées à cette marque et les marchandises liées à l'entreprise poursuivie sous ce nom sont fabriquées, vendues, données à bail ou louées, ou que les services liés à cette marque et les services liés à l'entreprise poursuivie sous ce nom sont loués ou exécutés, par la même personne, que ces marchandises ou services soient ou non de la même catégorie générale. 6(4) Idem L'emploi d'un nom commercial crée de la confusion avec une marque de commerce, lorsque l'emploi des deux dans la même région serait susceptible de faire conclure que les marchandises liées à l'entreprise poursuivie sous ce nom et les marchandises liées à cette marque sont fabriquées, vendues, données à bail ou louées, ou que les services liés à l'entreprise poursuivie sous ce nom et les services liés à cette marque sont loués ou exécutés, par la même personne, que ces marchandises ou services soient ou non de la même catégorie générale.

6(5) What to be considered 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; (c) 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.

6. (5) Éléments d'appréciation 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.

[9]      Subsection 4(2) of the Act deals with when a trade-mark is deemed to be used

with respect to services which is the case here:

(2) A trade-mark is deemed to be used in association with services if it is used or displayed in the performance or advertising of those services.

(2) Une marque de commerce est réputée employée en liaison avec des services si elle est employée ou montrée dans l'exécution ou l'annonce de ces services.

[10]      When the factors for confusion that are contained in subsection 6(5) are applied,

the plaintiffs must show on the balance of probabilities, that there is a likelihood of confusion with the plaintiffs' registered trade-mark when the defendant's trade name is used by the defendant in relation to its services. As Linden J.A. stated in United Artists Corp. v. Pink Panther Beauty Corp. (1998), 80 C.P.R. (3d) 247 (F.C.A.) at pages 258 - 259:

A trade-mark is a mark used by a person to distinguish his or her wares or services from those of others. The mark, therefore, cannot be considered in isolation, but only in connection with those wares or services. This is evident from the wording of subsection 6(2). The question posed by that subsection does not concern the confusion of marks, but the confusion of goods or services from one source as being from another source. It is for this reason that marks which rely on geographic origins or generally descriptive words (e.g. the fictional marks Pacific Coffee or Premium Soda) are not afforded a wide ambit of protection. Even though proposed marks might be similar to them, the public is not likely to assume that two products that describe themselves as being "Pacific" or "Premium" necessarily originate from the same source. Because confusion is not likely, protection is not necessary.

[11]      In Miss Universe Inc. v. Bohna (1994), 58 C.P.R. (3d) 381 (F.C.A.), Décary J.A.

stated at page 387:

To decide whether the use of a trade mark or of a trade name causes confusion with another trade mark or another trade name, the court must ask itself whether, as a matter of first impression on the minds of an ordinary person having a vague recollection of that other mark or name, the use of both marks or names in the same area in the same manner is likely to lead to the inference that the services associated with those marks or names are performed by the same person, whether or not the services are of the same general class.

[12]      The application of the subsection 6(5) criteria is the same whether the issue is

the registrability of a trade-mark or the infringement of a trade-mark, however, the burden of proof is different.

[13]      As Linden J.A. stated in United Artists Corp. v. Pink Panther Beauty Corp.,

supra at page 259:

This concentration on the source of the wares or services must inform any consideration of section 6 of the Act. Six factors are enumerated: five specific and one general one. I shall briefly discuss each one of them in turn. The five specific considerations that must be considered indicate that the Court must balance the right of the trade-mark owner to the exclusive use of his or her mark, with the right of others in the marketplace to compete freely.

[14]      With these directions in mind, I will now consider the factors as they relate to the

present case.

[15]      (a)      The inherent distinctiveness of the trade-marks or trade names and the extent to which they have become known.

     I have come to the conclusion that the SPRINT trade names do not have an inherent distinctiveness, however, this is not the end of the matter as there are two factors to be considered under this heading, the second being the extent to which the SPRINT trade-marks have become known (i.e. its acquired distinctiveness). I am of the opinion that by its advertising and use in Canada from 1985 onward, the plaintiffs' trade-marks involving the use of the word SPRINT in association with various other names has acquired an inherent distinctiveness in relation to the services listed. The evidence of Douglas Reinhart (Discovery Evidence Question 141 which was tendered at trial) showed that there was considerable promotion of the mark in Canada between 1985 and 1993. The evidence of Mark Hemingway (Discovery Evidence Questions 66 and 67 which was tendered at trial) shows that a survey done by the plaintiffs indicated that there was a 20% to 30% awareness among Canadian consumers of the SPRINT name.

         Length of time in use.

     In this case, the plaintiffs have established that they have used their mark in Canada since about 1985. The defendant started to use its trade name at least as early as April, 1988 and perhaps as early as 1987.

     Overall, the plaintiffs' mark has been in use longer than the defendant's trade name, however, the defendant testified that his use of his business name was limited. The evidence shows that there was not any listing for his business name in the local telephone directories and there was not any evidence of the use of the name "Sprint Canada" at his business except for the letterheads, courier envelopes and proposed contracts. Mr. Bryant, a witness for the defendant stated that between 1987 and 1993, the defendant had not done business with anyone in Canada under the name "Sprint Canada". The evidence of Mr. Bryant was also to the effect that other than a coupon mailing project, the defendant company did not do any other business using the "Sprint" letterhead.

         Nature of the wares, services or business.

    

     In 1988 when the defendant registered its business name and commenced using "Sprint", the plaintiffs had a trade-mark registered for telecommunication services (SPRINT TMA 300,027) registered in 1985. The other SPRINT registrations are detailed in paragraph [4]4 of this decision. The wares/services for the SPRINT marks are primarily communication and telecommunication services. The services offered by the defendant are in the communications business, namely providing marketing, advertising and public relations and other services to businesses. It includes market planning and assessment (for example, who the client's target customers are, developing advertising, implementing market plans for a client and media planning and buying for the client's advertising. Mr. Bryant did, on discovery, indicate the following (which evidence was tendered at trial (Exhibit P-3) at Tab 1, pages 10 - 11:

         But you don't offer telecommunications services to your client per se?

    

         Well, through a program, if there is a telecommunications component, yes, and that is not necessarily what we will develop ourselves. We will access whatever tools are required, and if they happen to be telecommunications, so be it.

At Tab 2, page 20:

         So, for example, you could suddenly start training in the telecommunications field, correct?

         Correct.

     It is not clear from the evidence that the defendant had ever carried on any services in connection with the provision of telecommunication services as of the date of the action. Hence, the nature of the services are different.

         Nature of trade.

     The nature of the trade in which these services circulate is another consideration. The risk of confusion will be greater if the services are distributed in the same general market place. Here the services offered by the defendant appear to be offered to clients who want assistance in the marketing and advertising area. The defendant has not yet offered services in the telecommunications area.

         Similarity in appearance, sound and idea suggested.

     The plaintiffs' mark is "SPRINT" and the defendant's trade name is "Sprint Canada". The defendant shows his trade name on stationary as:

and on courier envelopes as:

On the earlier letterhead, the words "SPRINT CANADA" were simply typed.

     It is my view that the plaintiffs' trade-mark and the defendant's trade name are very similar in appearance. The appearance of the horizontal lines on the trade name and the slanting to the right of the letters forming the word "Sprint" are not identical but are similar to each other. The words "Sprint" in both the trade name and the mark are very much alike. The addition of the word "CANADA" does little to change the matter as the defendant cannot take the plaintiffs' mark "SPRINT" and add another word to it to distinguish itself from the plaintiffs'. In Conde Nast Publications Inc. v. Union des editions modernes (1979), 46 C.P.R. (2d) 183 (F.C.T.D.) at page 188, Cattenach J. stated:

In J.B. Stone & Co., Ltd. v. Steelace Mfg. Co. Ltd. (1929), 46 R.P.C. 406, Lawrence, L.J., said at p. 418 that it was no answer for a person to say:

Oh, yes, we use the whole of your trade mark, but we are using it in such a way as we consider will not cause deception or interfere with your trade.

He continued to say:

In my opinion such an answer affords no defence to an action by a registered owner of a trade mark whose mark is being used by a rival trader upon or in connection with the goods of the latter for whatever purpose it may be so used.

This, in my view, is precisely what the respondent has done. It has appropriated the appellant's mark in its entirety and added thereto as a suffix the words "age tendre". It is axiomatic that the first word or the first syllable in a trade mark is far the more important for the purpose of distinction. Here the first and most important word in the mark which the respondent seeks to register is identical to the mark registered by the appellant.

In Carling O'Keefe Ltd. v. Anheuser-Busch Inc. Nos. 1 and 2 (1982), 68 C.P.R. (2d) 1 (F.C.T.D.) at page 33, Walsh J. stated:

A distinction must be made between a passing-off action when the totality of a mark can be looked at and an infringement action. Fox, Canadian law of Trade Marks and Unfair Competition at p. 392 states:

The addition of matter, such as the use of the defendant's name, in an effort to identify true origin, will not relieve from infringement so long as the plaintiff's mark has been used. No amount of added matter intended to show the true origin of the goods can affect the question, whereas in a passing off case a defendant may escape liability if he can show that the added matter is sufficient to distinguish his goods from those of the plaintiff.

And again at p. 394:

Where the defendant has clearly taken the distinctive parts of the plaintiff's trade mark as registered the addition of his own name or any other distinguishing indicia will not avail him as a defence.

         All the surrounding circumstances.

     The above term obviously includes all of the specific factors just listed and discussed. In addition, this factor allows the judge or Registrar, as the case may be, to take into consideration any fact peculiar to the situation at hand. Any evidence of actual confusion would be relevant. Mr. Bryant's testimony included the following at pages 204 - 206 of the transcript:

         And you say that in 1994 that whenever your clients were approached with the name "Sprint Canada" that they thought you were the telecommunications company?

         When we discussed the name "Sprint Canada" with our clients, with our associations, they all came back and they were puzzled, bewildered, that there were two names "Sprint Canada".

         Did they think that somehow you were associated with them or perhaps licensed by them; did they ask you questions of that kind?

         The answer is no.

         The answer is they did not or your answer to them was "No"?

    

         The answer that they did not because they knew the businesses that we operated. They knew we were not a telephone company.

         Well, you say they were confused?

         Yes, they were confused as to how can it be that there are two companies allowed to have the same name to operate in the same jurisdiction. Even senior marketing people, you know, they didn't understand that.

         A possible explanation might have been that Sprint Canada and you had done some sort of deal where you were licensed to offer these kind of marketing services under their name. That would be a possible explanation, wouldn't it?

         It wasn't anything they - - our clients and association knew that we had no such arrangement because I explained to them that we did not.

         So you told them that you did not have a license with Sprint Canada?

         That's correct.

            

         And they were concerned whether you did and you told them that they did not?

         No, they weren't concerned that we did, they were just perplexed as to why there could be co-existence - - there could be in the market place two companies with exactly the same name.

         Why would you be explaining that you did not have the license from them if they were not concerned about that?

         I wasn't explaining to them that there was not a license from the telephone company.

         I thought you said that.

         No, I explained that we did not offer telephone services.

         Is that what your recollection is now?

         Yes.

         So at that time, that seemed to be the case with virtually every one of your customers?

         Not every one of customers. Some of the individuals with whom we were dealing.

         Were there a number of clients that were so concerned?

         They expressed, again, an astonishment that you could have the same name.

And the following at pages 207 and 208:

         Is it true that every time you discussed the Sprint Canada name your clients were under the impression that you were a tele-communications company?

    

         No, they did not express that we were a tele-communications company because they knew the type of company that we were.

         Well, do you recall being examined for discovery?

         Yes.

         And I want to show you a question and answer that you gave me at the examination for discovery. And I'll read it to you; question 172:

"Q.      What evidence do you have of that confusion?

         Personal communications with - - every time we discussed the Sprint Canada name they, our clients, were of the impression that we're a tele-communications company." (As read)

         Is that answer true?

         In terms of what you have there textually, yes. In terms of the intent of the answer, no.

[16]      The surrounding circumstances are also important when the Court is determining

how much weight to give to each of the subsection 6(5) factors.

[17]      In United Artists Corp. v. Pink Panther Beauty Corp., supra, Linden J.A. stated at

page 264:

Where the surrounding circumstances are also important is in determining how much weight each of the enumerated factors should be given. In Polysar Ltd. v. Gesco Distributing Ltd. (1985), 6 C.P.R. (3d) 289 (F.C.T.D.), Joyal J. considered the question of the flexibility given to the Court or the Registrar in assessing the significance of each factor listed under subsection 6(5). He stated:

Of particular relevance to the criteria outlined in s-s. 6(5) of the statute is the principle that they need not be interpreted as having equal weight. Each particular case of confusion might justify greater significance being given to one criteria than to others. [Ibid., at 298].

Thus, in each particular set of circumstances, the Court or the Registrar must be aware that the significance of these factors must be gauged anew. (See also, Beverley Bedding & Upholstery Co. v. Regal Bedding & Upholstering Ltd. (1980), 47 C.P.R. (2d) 145 (F.C.T.D.).)

[18]      It is my opinion that more weight should be given to the fact that in this case, the

defendant's customers found that the mark "SPRINT" and the trade name "Sprint Canada" were confusing. As well, more weight should be given to the fact that the mark and the trade name are very similar in appearance. As a result of this conclusion, I am not persuaded on a balance of probabilities that there is not a likelihood of confusion between the defendant's trade name and the registered mark of the plaintiffs, TMA 300,027. In fact, I am of the opinion, on the balance of probabilities, that there is a likelihood that the trade name of the defendant will cause confusion with the trade-mark of the plaintiffs.

[19]      Based on the evidence, I find that the plaintiff, Sprint L.P. is the owner of the

trade-mark "SPRINT" (TMA 300,027). As well, I find that the defendant is the owner of the trade name "Sprint Canada".

[20]      The evidence of Mr. Bryant, the correspondence of February, 1987, and the letters

of Mr. Bryant, lead me to the conclusion that the defendant used the trade name to advertise his services in the relevant time frame, thus, there was use of the trade name by the defendant as contemplated by subsection 4(2) of the Act and thus, the right of the plaintiffs to its trade-mark's exclusive use pursuant to subsection 20(1) of the Act has been infringed.

[21]      The owner of a registered trade-mark has, subject to section 19 of the Act, the

exclusive right to use the trade-mark throughout Canada.

[22]      Issue 2

     Should an injunction issue to restrain the defendant, by its directors,

officers, employees, agents or otherwise from using any of the SPRINT trade-marks in a manner likely to have the effect of depreciating the value of the goodwill attaching thereto, which is contrary to Section 22 of the Trade-marks Act, R.S.C. 1985, c. T-13 (the "Act")?

     Subsection 22(1) of the Act provides that no person shall use a trade-mark registered by another person in such a manner that is likely to have the effect of depreciating the value of the goodwill attached to the trade-mark. The text, Hughes on Trade Marks (Roger T. Hughes et al, Hughes on Trade Marks, looseleaf, Toronto, Butterworths, 1984) at paragraph 44, states in part:

Goodwill as referred to in section 22 of the Trade-marks Act, while not necessarily the same as or coextensive with the meaning of goodwill as applied to a business, is made up of similar elements; it is that portion of the goodwill of the business of its owner which consists of the whole of the advantage of the reputation which is identified with the goods distributed by the owner in association with the trade-mark. When use of a trade-mark has been discontinued and the public so notified, there appears to be little goodwill left to protect by way of injunction. To "depreciate the value" of such goodwill means to reduce the advantage of the reputation, to take away the whole or some portion of the custom otherwise to be expected and thus render it less advantageous. It can be the use of a confusing mark which results in an erosion and dilution of the prestige, strength and integrity of the mark. The depreciation of the value of the goodwill does not require competition leading to an immediate loss of sales. Damage must be proven, particularly where the maligning at issue appears unintentional and has limited publication.

[23]      The evidence presented has not persuaded me to find that there was any

depreciation in the value of the goodwill attached to the plaintiffs' trade-marks. In fact, the evidence with respect to "Sprint Canada", which was supplied in an RBC Dominion Securities Analyst's Report dated Mary 15, 1997 indicated the opposite. As well, I am not prepared to grant the injunction requested by the plaintiffs with respect to goodwill.

[24]      Issue 3

     Should an injunction issue to restrain the defendant, by its directors, officers, employees, agents or otherwise from infringing any of the plaintiffs' registrations Nos. TMA 300,027, TMA 414,722, TMA 418,135, TMA 398,590, TMA 423,517 on a quia timet basis?

     The defendant has indicated his company will continue to use the trade name "Sprint Canada" unless enjoined from so doing by this Court (see paragraph 23 of the Joint Statement of Facts which is paragraph [4] of this decision). A quia timet injunction may be granted if there is a real probability that the defendant will engage in that conduct. The inclusion of paragraph 23 in the Joint Statement of Facts establishes that there is a real probability that the defendant will engage in the conduct sought to be restrained. Therefore, I will grant the quia timet injunction requested by the plaintiffs.

[25]      Issue 4

     Should an injunction issue to restrain the defendant, by its directors, officers, employees, agents or otherwise from adopting any domain name in Canada which is confusing with any of the plaintiffs' Sprint L.P.'s registered trade-marks, set out in paragraphs 5 and 19 of the Statement of Claim?

     By its statement of claim, the plaintiffs allege the defendant has infringed their rights by registering the domain names "sprintcanada.com" and "sprintus.com". The evidence presented at the trial shows that the defendant did register these domain names however, Mr. Bryant's evidence is that the names were used only as an e-mail site. There is no evidence that the defendant set up a website to offer services under these names or that it offered services through a website address. I can see no basis upon which to find that an infringement occurred. I am not prepared to grant the injunction requested.

[26]      Issue 5

     Are the plaintiffs entitled to damages for:

(a)      the making of false and misleading statements which have tended to discredit the business or services of the plaintiffs?

the use of the SPRINT trade-marks in a manner which has depreciated the value of the goodwill attaching thereto?

             trade-mark infringement?

             passing-off?

are the plaintiffs entitled to punitive, aggravated and exemplary damages?

are the plaintiffs entitled to pre-judgment and post-judgment interest?

     With respect to the claim for damages in paragraphs 5(a) and (c), I am not satisfied that the damages have been proven. Accordingly, I will not award any damages under these paragraphs. The claim for damages for passing-off was not proceeded with.

[27]      The claim for punitive, aggravated and exemplary damages is not allowed as the

evidence does not establish the basis for an award of these types of damages.

[28]      The claims in Issue 5 (f) have no application as no monetary award was granted.

[29]      With respect to costs, the parties have asked to make written submissions to me

and I would order that such submissions be made by December 8, 2000.

[30]      The defendant, through its counsel, provided the following undertaking:

The Defendant agrees and undertakes that it shall not use the name SPRINT CANADA or any confusingly similar name in association with local or long distance telephone services nor shall it use the name SPRINT CANADA or any confusingly similar name in association with the business of operating a telecommunications network.

     After considering the undertaking and the evidence given at trial, I will grant the injunction requested in paragraphs 26(a)(i), (iii) and (iv) of the statement of claim.

[31]      The counterclaim of the defendant shall be dismissed. It should be noted that the

defendant did not argue the counterclaim either in its submission or orally before me at trial.

ORDER

[32]      IT IS ORDERED that a quia timet injunction requested by the plaintiffs be

granted.

[33]      IT IS FURTHER ORDERED that the injunction requested in paragraph

26(a)(i), (iii) and (iv) of the statement of claim be granted.

[34]      AND IT IS FURTHER ORDERED that written submissions be made with

respect to costs by December 8, 2000.

     "John A. O'Keefe"

     J.F.C.C.

Ottawa, Ontario

November 10, 2000

     FEDERAL COURT OF CANADA

     TRIAL DIVISION

     NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:      T-2814-94

STYLE OF CAUSE:      SPRINT COMMUNICATIONS COMPANY LP ET AL      v. MERLIN INTERNATIONAL COMMUNICATIONS      INC.

    

PLACE OF HEARING:      OTTAWA, ONTARIO

DATE OF HEARING:      MAY 15, 2000

REASONS FOR ORDER AND ORDER OF MR. JUSTICE O'KEEFE

DATED:      NOVEMBER 10, 2000

APPEARANCES:

ROBERT H.C. MacFARLANE AND

MICHAEL E. CHARLES          FOR PLAINTIFFS

BOB H. SOTIRIADIS          FOR DEFENDANT

SOLICITORS OF RECORD:

BERESKIN & PARR          FOR PLAINTIFFS

TORONTO, ONTARIO

LEGER ROBIC RICHARD          FOR DEFENDANT

MONTREAL, QUEBEC