Federal Court Decisions

     T-2097-96

BETWEEN:

     MAN AND HIS HOME LTD.

     carrying on business as Alarme Sentinelle/Sentinel Alarm

     Plaintiff

     - and -

     MANSOOR ELECTRONICS LTD.

     - and -

     RENO-DEPOT INC.

     Defendants

     REASONS FOR DECISION

TREMBLAY-LAMER J.

     The plaintiff Man and His Home Ltd./Sentinel Alarm (hereinafter "Sentinel Alarm") is a corporation duly incorporated under the Canada Business Corporations Act,¹ and is the owner of five SENTINEL registered trade-marks. The plaintiff is a specialist in critical condition signal initiating security systems. His business includes the installing, servicing and maintenance of such systems, as well as signal monitoring and surveillance from a central monitoring station.

     The defendant, Mansoor Electronics Ltd. (hereinafter "Mansoor"), is a corporation duly incorporated under the laws of Ontario, which has owned the HOME SENTINEL trade-mark since March 22, 1996. The defendant Reno-Depot Inc. (hereinafter "Reno-Depot") is a corporation duly incorporated under the Canada Business Corporations Act,² which sells and markets hardware products.

     On September 20, 1996, the plaintiff Sentinel Alarm filed a statement of claim which alleges that the defendant Mansoor is using a trade-mark which infringes and causes confusion with its SENTINEL trade name and registered trade-marks, contrary to sections 6(2), 12(1)d), 16, 17(1), 18, 19 and 20 of the Trade-Marks Act³ (hereinafter the "Act"). The plaintiff further alleges that the defendants are passing off their services and wares for those of the plaintiff, contrary to paragraphs 7b) and c) of the Act.

     By notice of motion filed on the same date, Sentinel Alarm seeks, inter alia, an interlocutory injunction restraining the defendants from using the name SENTINEL in the manufacture, sale, marketing, promotion, installation and advertising of security and alarm equipment or in association with any of the SENTINEL registered trade-marks or any trade-marks or trade-name likely to be confusing therewith, and from passing off their services/wares for those of the plaintiff.

I.      The Facts

     The relevant facts can be summarized as follows. The plaintiff Sentinel Alarm is the owner of five SENTINEL registered trade-marks. In January 1993, the plaintiff discovered that the defendants were using, in connection with the sale, marketing and distribution of alarm and security systems, a trade-mark which infringes and causes confusion with its SENTINEL trade-name and registered trade-marks. On April 15, 1993, the defendant Mansoor, through its attorneys, agreed and undertook to stop using and to not use in the future the word SENTINEL or SENTINELLE in relation to home security and alarm systems. Notwithstanding that clear and express undertaking, on March 22, 1996 the defendant Mansoor applied for and subsequently obtained the registration of the trade-mark HOME SENTINEL. The defendant Reno-Depot sells, markets, distributes and advertises the defendant Mansoor's products bearing the name HOME SENTINEL.

II.      The Parties' Submissions

A.      The Plaintiff

     The plaintiff Sentinel Alarm submits that the defendant Mansoor's trade-mark was not registrable on March 22, 1996. In support of this argument it invokes sections 6(2), 12(1)d), 16 and 18 of the Act. Since the defendant Mansoor's trade-mark is confusing with those of the plaintiff it should be expunged. By reason of their acts, the defendants have and are infringing the plaintiff's SENTINEL registered trade-marks thereby contravening sections 19, 20 and 22 of the Act. It is further submitted that the defendants are passing off their services/wares for those of the plaintiff.

     The plaintiff also stresses that, as it completely disregarded its clear and express undertaking, the defendant Mansoor acted reprehensibly and with extreme and exceptional bad faith.

     The plaintiff has instituted actions against others who in the past have infringed its SENTINEL registered trade-marks. The plaintiff verily believed that the defendant Mansoor would not disrespect its undertaking. Accordingly, it cannot be said that, on the date of the advertisement of the defendant Mansoor's trade-mark, the plaintiff had abandoned its SENTINEL registered trade-marks.

     The plaintiff Sentinel Alarm alleges that, without the relief sought in this notice of motion, it will suffer irreparable harm. The longer other entities using the name SENTINEL remain in the market place, the more likely it is that the public that would otherwise purchase products and services from the plaintiff will decline. Hence, the value of the plaintiff's SENTINEL registered trade-marks will be jeopardised. The plaintiff tendered the affidavit of Mr. Ivan Spector, the duly authorized representative and President of the plaintiff, wherein he states that at the beginning of August 1996, he was approached by Mr. John Pappas, the representative of a company known as Spartan Security and whom he has known for a period of ten years. Mr. Pappas communicated with him in order to obtain information about some products which he saw at Reno-Depot in Montreal, bearing the name HOME SENTINEL, and which he believed were manufactured or marketed by Man and His Home Ltd./Sentinel Alarm and which he thought he might be able to use in the operation of his business. Mr. Pappas more specifically congratulated him for commencing a marketing program with a large retailer like Reno-Depot. Immediately following the meeting with Mr. Pappas, the plaintiff sent a cease and desist letter to the defendant Mansoor. Once it became evident that the defendant Mansoor would not comply with his requests, the present proceedings were instituted.

     The defendant Mansoor's products that are sold in Quebec are sold in the greater Montreal area. Ninety percent (90%) of the plaintiff Sentinel Alarm's business occurs in the province of Quebec, 90% of which occurs in the greater Montreal area. The defendant Mansoor and the plaintiff Sentinel Alarm share the same ultimate customer base in that both are attempting to sell alarm systems to residential and commercial customers. Numerous comparisons contrasting the benefits of Mansoor's system over a monitored system such as those sold by the plaintiff appear on Mansoor's product packaging. The defendant Mansoor's products, like those of the plaintiff, are designed for use in homes, offices and stores.

     With respect to the balance of convenience, the plaintiff stresses that the defendant Reno-Depot is a sizable chain store and consequently exposes the defendant Mansoor's offending wares to a very wide consumer market. Furthermore, it is argued that, should the Court decline to issue the order sought in the notice of motion, the plaintiff will be vulnerable to other potential infringers.

B.      The Defendants

     The defendant Mansoor first argues that the plaintiff failed to demonstrate a serious issue to be tried. Indeed, no confusion is possible between its trade-mark and those of the plaintiff. The plaintiff's trade-marks were all registered in association with services only, whereas Mansoor's trade-mark HOME SENTINEL is registered in association with wares. Unlike the plaintiff, the defendant Mansoor distributes its home security products throughout Canada. Moreover, Mansoor's product is aimed at the "do it yourself" consumer who is willing to install the system. Sentinel Alarm, on the other hand, targets consumers who are seeking to purchase a fully monitored system. Unlike Mansoor's customers, approximately 50% of the plaintiff's customers are businesses.

     As to the irreparable harm allegedly suffered by the plaintiff, the defendants stress that the plaintiff failed to tender actual evidence of loss of reputation. The defendant Mansoor submits that the plaintiff has not lost and will not lose one single sale of either its services or products as a result of the use by the defendant Mansoor of its HOME SENTINEL trade-mark.

     As to the balance of convenience, the costs for the defendant Mansoor to discontinue the use of its HOME SENTINEL trade-mark would be at least $343,850.00.⁴ Moreover, the defendant Mansoor would not be able to use two different trade-marks for the same products, i.e. one for Canada and another for export in that the minimum volume that the manufacturers demand would preclude such a possibility. Further, the defendant Reno-Depot offers to keep separate and distinct accounts for all of the defendant Mansoor's wares sold in its stores until a final judgment is rendered in the within proceedings.⁵

III.      Analysis

     As was stated by the Associate Chief Justice in Astra Aktiebolag v. Aastra Corp.,⁶ the granting of an application for interlocutory injunction should be confined to cases where the merits are clear and the risk of harm to the grieving party is great and imminent. Further, as indicated in RJR-MacDonald Inc. v. Canada (A.-G.),⁷ the three-part test established by the House of Lords in American Cyanamid Co. v. Ethicon Ltd.⁸ applies to a motion for interlocutory injunction in Canada. The three steps of the test can be summarized as follows:

a)      An applicant for interlocutory relief must demonstrate a serious question to be tried. Whether this first part of the test has been satisfied should be determined by the motions judge on an extremely limited review of the case on the merits.9

    

b)      At the second stage, the applicant must convince the court that it will suffer irreparable harm if the relief is not granted. Irreparable harm is established where it is impossible to calculate the loss suffered.10

    

c)      The third branch of the test requires an assessment of the balance of convenience. The Court must determine which of the parties would suffer greater harm from the granting or refusal of the interlocutary injunction, pending a decision on the merits.11

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A.      Serious questions to be tried

         As previously stated, the plaintiff's submissions are twofold. The plaintiff first alleges that the defendant Mansoor's trade-mark infringes and causes confusion with its SENTINEL registered trade-marks. It is further submitted that the defendants are passing off their services/wares for those of the plaintiff. I must now determine whether the plaintiff has demonstrated a serious question to be tried. I propose to deal first with the trade-mark infringement aspect of the plaintiff's action.

     Although it is open to the trial judge to come to a different conclusion after reviewing all of the evidence on a preliminary assessment of the case on its merits, I am not conviced that the plaintiff's submission regarding the infringement of its registered trade-marks raises a serious issue to be tried. While it was for the plaintiff to establish that there is a likelihood of confusion between its registered trade-marks and that of the defendant Mansoor, I find that their only common element is the use of the word SENTINEL, which is not very distinctive. In this regard, it is worth noting that, according to the evidence tendered by the defendants, 54 registered trade-marks use that same word. The reasoning of the Supreme Court of Canada in General Motors Corporation v. Bellows¹² is, in my view, applicable here:

where a party has reached inside common trade vocabulary for a word mark and seeks to prevent competitors from doing the same thing, the range of protection to be given him should be more limited than in the case of an invented or unique or non-descriptive word.

     Further, the evidence shows that the parties operate in different markets. While Sentinel Alarm's customer, be it an individual or a business, wants to benefit from the protection of a more sophisticated security system "a monitored security system", the defendant Mansoor's market is composed mainly of consumers interested in "do it yourself kits" in order to avoid the extra costs that stem from monitoring.¹³ This distinction, in my view, decreases the risk of confusion. In M.K. Stereo Plus Ltd. v. Broadway Sound Plus Ltd.,¹⁴ where a similar distinction existed, McNair J. stated:

I am satisfied on the evidence in its entirety that the channels of trade of the parties are quite dissimilar in that the services and business of the appellant are directed to the budget-conscious shopper and not to the more sophisticated audiophile customer whose patronage the respondent enjoys.

Similarly, in Bally Schuhfabriken AF/Bally's Shoe Factories Ltd. v. Big Blue Jeans Ltd.,¹⁵ my colleague, Rouleau J., declared:

Furthermore, in assessing the likelyhood of confusion, while it is not necessary to prove that the wares are sold in the same places, the fact that they are sold in dissimilar establishments is a factor that would decrease the risk of confusion.

     I turn now to the passing off aspect of the plaintiff's claim. In Ciba-Geigy Canada Ltd. v. Apotex Inc.,¹⁶ the Supreme Court of Canada defined the three necessary components of a passing-off action: the existence of goodwill, deception of the public due to a misrepresentation and actual or potential damage to the plaintiff. After reviewing the evidence adduced thus far by the parties and given these requirements, I am not conviced that the plaintiff has demonstrated a serious issue to be tried.

B.      Irreparable harm

     Had I found that the plaintiff did demonstrate a serious issue to be tried, I would have nevertheless dismissed the application on the ground that the plaintiff did not show irreparable harm should the injunction be refused.

     In Center Ice Ltd. v. National Hockey League,¹⁷ the Federal Court of Appeal decided that mere evidence of confusion is insufficient to justify the inference of irreparable harm. In particular, as I pointed out in Carterpillar Inc. v. Chaussures Mario Moda Inc.,¹⁸ the Court cannot infer the existence of loss of goodwill or reputation from the mere evidence of confusion. There has to be actual evidence of a loss of reputation. The evidence tendered must be clear and non-speculative. A bare allegation on the part of the plaintiff that the defendant's activities have caused it to suffer irreparable harm is, in my opinion, insufficient.

     As to the possibility of calculating the loss suffered by the plaintiff should his motion be dismissed and the action successful, the defendant Reno-Depot has offered to keep separate and distinct accounts for all the defendant Mansoor's wares sold. There was no evidence tendered by the plaintiff of sales lost which could not be compensated by damages.

     For the foregoing reasons, I am of the view that, the plaintiff has failed to establish real and immediate irreparable harm which cannot be compensated by damages.

     Given this conclusion, I need not address the issue of the balance of convenience. In any event, it appears to me that, because the harm allegedly suffered by the plaintiff can be compensated by damages, it cannot be established by the plaintiff that the balance of convenience lies in its favour.¹⁹

     The plaintiff's application for an interlocutory injunction is therefore dismissed with costs in the cause.

OTTAWA (Ontario)

This 28th day of November 1996

    

                                 JUDGE

__________________

¹      R.S.C. (1985), c. C-44, as amended.

²      Ibid.

³      R.S.C. (1985), c. T-13, as amended.

⁴      Affidavit of Ken Aviss, paragraphs 43 and 44.

⁵      Affidavit of André Joly, paragraph 4.

⁶      (1996), 63 C.P.R. (3d) 357 (F.C.T.D.).

⁷      [1994] 1 S.C.R. 311.

⁸      [1975] A.C. 396.

⁹      RJR-MacDonald Inc. v. Canada (A.-G.), supra note 7, at p. 337.

¹⁰      Ciba-Ceigy Canada Ltd. v. Novopharm Ltd.(1994), 83 F.T.R. 161 (F.C.T.D.); application for reconsideration refused (1994), 83 F.T.R. 233 (F.C.T.D.).

¹¹      RJR-MacDonald Inc. v. Canada (A.-G.), supra note 7, at p. 342.

¹²      [1949] S.C.R. 678, at p. 691.

¹³      Affidavit of Ken Aviss, paragraphs 34 and 35.

¹⁴      (1985), 5 C.P.R. (3d) 390 (F.C.T.D.), at pp. 398 and 399.

¹⁵      (1992), 41 C.P.R. (3d) 204 (F.C.T.D.), at p. 211.

¹⁶      [1992] 3 S.C.R. 120, at p. 132 (per Gonthier J.).

¹⁷      (1994), 53 C.P.R. (3d) 34, 166 N.R. 44 (F.C.A.).

¹⁸      (1995), 62 C.P.R. (3d) 338 (F.C.T.D).

¹⁹      Imperial Chemical Industries PLC v. Apotex, Inc., [1990] 1 C.F. 221 (F.C.A.).