Date: 22010517
Docket: T-523-01
Neutral Citation: 2001 FCT 505
Vancouver, British Columbia, Thursday, the 17th day of May, 2001
PRESENT: THE HONOURABLE MR. JUSTICE PELLETIER
BETWEEN:
ARXX BUILDING PRODUCTS INC.
Plaintiff
and
POLYFORM CELLULAR PLASTICS INC.,
POLYFORM A.G.P. INC.,
AIM BUILDING PRODUCTS INC.,
FASTFORM CONCRETE FORMING,
NEW MILLENNIUM BUILDING PRODUCTS LIMITED,
1178449 ONTARIO INC. (operating as ADVANCED WALL SYSTEMS),
INNOVATIVE BUILDING MATERIALS LTD.,
JAMWOOD DEVELOPMENTS INC. (operating as FOAM FORM
and ADVANCED ENGINEERED BUILDING PRODUCTS),
CHARLES BELIVEAU, PATRICK J. TIMONY,
MURRAY SNIDER, TOBIN INNOVATIVE PRODUCTS INC.,
RIDEAU LUMBER (SMITH'S FALLS) LIMITED,
ISO-MAXX BUILDING PRODUCTS LTD. and DONKERS HARRIS LTD.
Defendants
REASONS FOR ORDER & ORDER
[1] This is a motion for an interim injunction enjoining a group of defendants from infringing the applicant's trade marks or passing off their goods as the goods of the applicant. What makes this motion somewhat unusual is that it arises after the settlement of a prior application for the same relief involving essentially the same parties save for two additional parties who have now been added to the action
[2] The Plaintiff Arxx Building Products Inc. ("Arxx") is the owner of two trade marks. The first, BLUE MAXX, is an unregistered trade mark which the Plaintiff has used since 1996 in connection with insulated concrete forms. Arxx recently announced that it would cease using this trade mark as a result of difficulties experienced in attempting to register the mark. The second trade mark is THE MAXX which is a registered trade mark whose use has been more restricted. Arxx says that the trade mark has been used in connection with some of it product but the evidence of the defendants, in particular, Mr. Beliveau, is that he has never seen it used in connection with Arxx's products, with which he says he is intimately familiar. If it has been used, it's use has been very limited.
[3] For the most part, the defendants are a group of former distributors of Arxx's products, or the principals of those companies, whose distributorship agreements were terminated when Arxx learned that they were selling a product which competes with its product under the name NuMaxx. The competing product is also insulated concrete forms. The product is manufactured by another defendant Polyform Cellular Plastics Inc. ("Polyform"), a subsidiary of Polyform A.G.P. Inc, a holding company, and is sold to the other defendants by a company known as Aim Building Products Inc. ("Aim"). Aim's Vice President is Mr. Beliveau, who is also the Vice- President of Polyform. Mr. Snider, who is the Sales Manager of Aim , owns shares in that company as well as in the Defendant 1178449 Ontario Inc (which carries on business as Advanced Wall Systems ("Advanced Wall")). Alain Leger is the principal of a numbered company which also owns shares in Aim while his wife Jill Leger is the principal of the defendant Innovative Building Materials Ltd. ("Innovative"). The remaining original defendants are Jamwood Developments Inc, operating originally as Foam Form and now as Advanced Engineered Building Products ("Foam Form"), New Millennium Building Products Limited ("Millennium"), Fastform Concrete Forming ("Fastform") and Tobin Innovative Products Inc ("Tobin"). The evidence of Mr. Robinson is that between them Advanced Wall, Millennium, Fastform, Innovative Building Materials Ltd and Foam Form accounted for between 45% to 65% of Arxx's sales in Ontario.
[4] In March 2001, Arxx launched a motion for injunctive relief against these defendants and one or more other defendants whose role in these events is peripheral. As a result of various considerations, that motion was settled by a written agreement between Arxx and the defendants in which the Defendants agreed, inter alia:
- to refrain from using the word NuMaxx as a trade mark, trade name and to destroy all material bearing that word which was possible for them to destroy.
- to refrain from using in Canada words confusingly similar to BLUE MAXX or THE MAXX alone or in combination with other words
- to refrain from using the word MAXX or MAX alone or in combination with other words in a trade mark, trade name or otherwise in association with insulated concrete form products and services.
- promoting or selling any Arxx products including BLUE MAXX or THE MAXX except to sell off existing inventories.
- making any statements that their insulated concrete form product is a replacement for BLUE MAXX or THE MAXX products
- making any representations that they are connected in any way with Arxx, BLUE MAXX or THE MAXX.
[5] In addition, Polyform and Aim agreed to inform their current distributors of the conditions set out above and to ensure that they complied with them. In addition, the agreement contains this clause:
This agreement shall be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. The parties agree that Ontario is the forum for any matter arising under this Agreement and that the courts of Ontario shall have the exclusive jurisdiction and the parties hereby irrevocably attorn to the exclusive jurisdiction of the Courts of the Province of Ontario.
[6] Following the execution of this agreement by counsel on behalf of their clients, Arxx discontinued "with prejudice" its motion for an injunction, by which I take it that Arxx was agreeing to forego any grounds which it may have had to seek an injunction on the basis of events occurring before the date of the discontinuance.
[7] The settlement agreement was executed on April 3, 2001. By April 23, Arxx learned of circumstances which it regarded as being breaches of the settlement agreement and entitling it to an injunction. Arxx did not ask this court enforce the settlement agreement, which it could not do in the face of jurisdictional issues and the attornment clause set out above. But it pointed to certain facts which it said entitled it to an injunction on their own.
[8] Arxx was informed that at the London Spring Home and Garden Show which took place during the week preceding April 23, a booth operated by Donkers Harris Ltd ("Donkers Harris"), who were customers of Advanced Wall, displayed a large sign which incorporated the BLUE MAXX logo together with the following statement: "Introducing NuMaxx". The sign also contained a reference to Maxx Wall Systems.
[9] Another booth at the same show was operated by Iso-Maxx Building Products Ltd. ("Iso-Maxx") who were previously unknown to Arxx. That booth had Aim promotional material one of which contained references to Maxx Wall Systems. The individuals manning the booth had business cards which referred to Maxx Wall Systems and showed the BLUE MAXX logo. The email address for Maxx Wall Systems is shown as "maxxwall@donkersharris.com".
[10] On April 25, 2001, Arxx became aware that Tobin continued to use the BLUE MAXX logo on a large roadside sign and continued to describe itself as a BLUE MAXX distributor. A visit to another contractor's jobsite resulted in a conversation in which a representative of the contractor advised that he had been told by a Tobin representative that the BLUE MAXX product would now be known as NuMaxx.
[11] A visit to Foam Form, produced more instances of the use of BLUE MAXX and NuMaxx. From outside the showroom, Arxx products were clearly visible as were NuMaxx brochures. An example of Aim's insulated concrete form which had previously been sold as NuMaxx appeared to be for sale under the name Maxiform. One of the rooms in the premises was designated BLUE MAXX. When one of Arxx's representatives was introduced into the room, he saw a BLUE MAXX banner, various pieces of BLUE MAXX product and promotional material, BLUE MAXX catalogues and literature, and brochures with the name NuMaxx. Attempts to discuss BLUE MAXX product were steered towards the Aim product in the room which was described "THE product now".
[12] Arxx also has evidence that on April 13 a representative of Arxx attended at the National Home Show where she spoke with Mr. Jim Donkers who was present in the Aim booth. Mr. Donkers provided the Arxx representative with his business card which identified him as "Sales and Technical Support" for Iso-Maxx and Advanced Wall. At the same booth, the representative picked up a business card for Fastform which shows the BLUE MAXX logo and holds the business out as distributor of BLUE MAXX. Fastform's e-mail address is shown as "fastformbluemaxx@ora.auracom.com" .
[13] Arxx has included in its materials a printout of Donkers Harris website which refers to BLUE MAXX Wall System in terms which suggest it is a product offered by Donkers Harris.
[14] In response to this evidence, the defendants have produced their own affidavits from which the following emerges.
[15] The affidavit of Charles Beliveau discloses a number of facts in relation to the status of BLUE MAXX and THE MAXX as trade marks, namely that Arxx has expressed the intention of ceasing its use of the former and that the latter has never, to the knowledge of Mr. Beliveau been used in connection with insulated concrete forms. The Affidavit of Murray Snider says that he has not had any connection with the operation of Advance Wall Systems since he transferred the assets of the business to a purchaser, now known to be Iso-Maxx, on March 12, 2001 even though the transaction was not documented until April 2, 2001. Mr. Snider denies that Aim has sold any product under the name NuMaxx after March 30, 2001 and has not encouraged permitted or allowed others to do so.
[16] The Affidavit of Lawrence Mens of Advanced Engineered Building Products sets out that no Arxx product has been sold by that business since early 2001, well before April 3, 2001. Mr. Mens explains the various Arxx products and material which Arxx's representative says he observed, saying that efforts were made to remove all prohibited material but that since these proceedings have been commenced a fresh effort has been made and all material which can be removed has been removed.
[17] The affidavit of Rick Hallam of Tobin Innovative Products Inc. is to the effect that the roadsign has been taken down. Mr. Hallam explains that Tobin was under the impression that the use of NuMaxx was Arxx's major concern. All materials bearing NuMaxx have been replaced or destroyed. Further Hallam denies telling anyone that NuMaxx was replacing BLUE MAXX.
[18] The affidavit of Archie Duiker of Fastform asserts a right to continue using Arxx's trade marks pursuant to the distributorship agreement which Arxx purports to have cancelled but notwithstanding this claim of right, Fastform agrees to cease using Arxx's trade marks as it replaces its existing materials.
[19] The affidavit of Dan Strauss, the principal of Iso-Maxx Building Products Ltd deposes to the fact that Mr. Straus was unaware of the THE MAXX as a trade mark when he incorporated Iso-Maxx and that he intends to change the name to eliminate any reference to "Maxx" within 21 days.
[20] The affidavit of Gord Harris attests to the fact that Donkers Harris Ltd registered Maxx Wall Systems as a business name on or about March 28, 1998, prior to the registration of THE MAXX, and that its use of that name was known to various senior officers of Arxx. No objection was ever taken to the use of the name. Mr. Harris denies that Donkers Harris web page suggests that the firm is a distributor of BLUE MAXX. Finally, Mr. Harris denies that any confusion has been caused by the use of Maxx Wall Systems.
[21] In the end, I am satisfied that unauthorized use of BLUE MAXX occurred and that use of the NuMaxx name or trade mark persisted beyond the execution of the settlement agreement. Arxx is sorely tried by these what it sees as acts of infringement or passing off, which are also breaches of its settlement agreement, and wants an injunction both in respect of the acts of infringement or passing off which it says it observed and in respect of those which may occur. On the other hand, Arxx acknowledges that this court cannot enforce its settlement agreement so that the justification for the injunction must come from the behaviour of the defendants since April 3, 2001.
[22] The defendants raise a number of defences to the application for an injunction. First they say that Arxx is not the owner of the trade marks because the registration with respect to THE MAXX shows the owner as AAB Building Systems Inc. Notwithstanding the fact that Arxx has produced a certificate of Change of Name showing that AAB Building Systems Inc changed its name to Arxx Building Products Inc., the defendants continue to point to the certificate of registration and to section 53(4) of the Trade Marks Act R.S.C. 1985 c. T-13 which provides as follows:
(3) A copy of the record of the registration of a trade-mark purporting to be certified to be true by the Registrar is evidence of the facts set out therein and that the person named therein as owner is the registered owner of the trade-mark for the purposes and within the territorial area therein defined.
(3) Une copie de l'inscription de l'enregistrement d'une marque de commerce, donnée comme étant certifiée conforme par le registraire, fait foi des faits y énoncés et de ce que la personne y nommée comme propriétaire est le propriétaire inscrit de cette marque de commerce aux fins et dans la région territoriale qui y sont indiquées.
[23] With respect, I disagree that the effect of section 54(3) is to divest anyone who changes their name of their intellectual property. AAB Building Systems Inc and Arxx are the same person. There has been no transfer of property from one legal entity to another. There is no basis for saying that sub section 53(4) is evidence that Arxx does not own THE MAXX. Upon proof of change of name, Arxx's title was shown.
[24] The defendants argue that since there is no evidence of use of THE MAXX, and since Arxx has indicated an intention to cease using BLUE MAXX, there is no possibility of irreparable harm. Since no goodwill or reputation was associated with THE MAXX and since Arxx had voluntarily decided to forego the goodwill associated with BLUE MAXX, it cannot complain of loss to goodwill which it either never enjoyed or decided to give up.
[25] Arxx has produced authority to the effect that infringement of an uncontested registered trade mark amounts to irreparable harm. See Multi-Marques Inc. v. Boulangerie Gadoua Ltée. (2000) 6 C.P.R. (4th) 239 (Que. S.C.). This view is also found in Manager Clothing Inc v. Santana Jeans Ltd (1992) 46 C.P.R. (3rd) 192. This is consistent with a common sense view that if the statute accords the owner of a trade mark a monopoly as to its use, then an encroachment on that monopoly is irreparable harm since it destroys the monopoly. While psychiatry recognizes folie à deux, the law does not admit of monopoly à deux.
[26] Arxx has produced authority to the effect that infringement of an uncontested registered trade mark amounts to irreparable harm. See Multi-Marques Inc. v. Boulangerie Gadoua Ltée. (2000) 6 C.P.R. (4th) 239 (Que. S.C.). This view is also found in Manager Clothing Inc v. Santana Jeans Ltd (1992) 46 C.P.R. (3rd) 192. This is consistent with a common sense view that if the statute accords the owner of a trade mark a monopoly as to its use, then an encroachment on that monopoly is irreparable harm since it destroys the monopoly. While psychiatry recognizes folie à deux, the law does not admit of monopoly à deux.
[27] The situation is different in the case of a contested trade mark. See Syntex v. Novopharm Ltd (1991) 36 C.P.R. (3rd) 129 where the Federal Court of Appeal held that infringement of a contested trade mark could not constitute irreparable harm since such a finding assumed that the issues of validity of the trade mark had been decided in favour of the applicant when, in fact, such issues could only be decided after trial. These principles were confirmed again in Centre Ice Ltd v. National Hockey League (1994) 53 C.P.R. (3rd) 34. In addition, Centre Ice made clear that evidence of confusion or passing off did not constitute irreparable harm per se and that evidence of lost sales or other economic detriment was required to establish irreparable harm.
[28] In this case, the defendants have put into issue the applicants title to the trade marks claimed, arising either out of abandonment or lack of use. Arxx's position is that these challenges cannot possibly be taken seriously and are tactical only. One notes however that the Defendants maintained their challenge to Arxx's claim to the trade marks in the preamble to the settlement agreement. The allegations having been made and there being some evidence upon which they might succeed, it is not appropriate to grant an injunction which would require me to decide issues of ownership and validity on an interlocutory basis.
[29] There is another reason for coming to this conclusion which is that all of the defendants have undertaken to either cease the conduct of which Arxx complains or, as in the case of Donkers Harris, claim to be entitled to do that which they are reproached for doing. If the offending conduct has ceased, there is nothing for the court to enjoin. If the conduct is cloaked in a claim of right, interlocutory proceedings are not the appropriate forum for the determination of those issues.
[30] Further, none of the authorities deal with the situation where the applicant has indicated an intention to abandon the use of an unregistered trade mark. Arxx has indicate that it continues to retain its interest in the goodwill attached to BLUE MAXX but will be moving away from its use. While there may be damage to Arxx`s interest in the goodwill attaching to BLUE MAXX, assuming continuing infringement, it is difficult to see how that damage could be characterized as irreparable and not compensable in damages.
[31] Finally, there is some authority that injunction does not lie in circumstances where the defendant is able to pay any damages which might be assessed Caterpillar Inc et al. v. Chaussures Mario Moda Ltd. (1995) 62 C.P.R. (3rd) 338 (F.C.T.D.) where Tremblay-Lamer J. said that "without evidence of an inability to pay damages, I cannot conclude that there exists irreparable harm". The affidavit of Charles Beliveau deposes that Polyform is solvent and able to discharge any judgment obtained against it. For all of these reasons, I find that the applicant has failed to establish its entitlement to an injunction so that it's motion seeking one will be dismissed as against all defendants.
[32] I come to same conclusion with respect to Arxx's complaint of passing off. There is evidence from which passing off, or an attempt at passing off, could be found. But in the absence of evidence of lost sales, and in the face of the defendants undertakings to cease using the words to which objection is taken, there is no basis for a finding of irreparable harm.
[33] Finally, Arxx asked for an injunction on the basis of preventing future loss to its interests, a quia timet application. In fairness to the defendants, the material filed did not raise this as an issue. However, the better answer to this request is that quia timet lies where an intention to engage in damaging conduct is shown. It does not lie where the defendants have affirmed an intention to avoid causing harm. See Connaught Laboratories Ltd. v. Smithkline Beecham Pharma Inc. [1998] F.C.J. No. 1851 where the following appears at para 20:
From the foregoing authorities, I derive the following criteria for allegations that must be evident on the face of a statement of claim initiating a quia timet proceedings alleging patent infringement: the statement of claim must allege a deliberate expressed intention to engage in activity the result of which would raise a strong possibility of infringement; the activity to be engaged in must be alleged to be imminent and the resulting damage to the plaintiff must be alleged to be very substantial if not irreparable; and, finally, the facts pleaded must be cogent, precise and material. It is not sufficient that they be indefinite or speak only of intention or amount to mere speculation.
In the circumstances, there is no basis upon which I could grant an injunction quia timet.
[34] I turn now to the question of costs. In the normal course of events, costs would follow the event. I do not consider this to be the normal course of events. Arxx entered into a settlement agreement for the purpose of putting an end to a dispute with its former suppliers only to find that some of the conduct which was the object of the settlement continued to occur. Arxx was reproached for not writing a simple demand letter which, it is said, would have put a stop to the offensive conduct. I can appreciate why Arxx, having trusted in the defendant's respect for their commitments on a first occasion, only to be deceived, was reluctant to rely upon their finer sensibilities on a second occasion. The conduct giving rise to this application was, for the most part, due to a cavalier attitude to the commitments made in the settlement agreement by the original defendants. The agreement was crystal clear that the defendants were to cease all use of Maxx or Max in any combination and to cease using the trade mark NuMaxx. While the defendants have undertaken to cease, again, using these trade marks, it is reasonably clear that they did use them in contravention of the settlement agreement. As noted above, this Court is unable to enforce the terms of the settlement agreement, but it can look to it to determine what is reasonable in the matter of the assessment of costs. In the circumstances, I find that Arxx was justified in bringing its application, even though it did not succeed, and order that Arxx shall have its costs in the amount of $2,500 in any event of the cause from the original defendants. The costs of the added defendants shall be costs in the cause.
ORDER
[35] The motion for an injunction is dismissed. Arxx shall recover its costs of the motion in the amount of $2,500 from Polyform Cellular Plastics Inc., Polyform A.G.P. Inc., Aim Building Products Inc., Fastform Concrete Forming, New Millennium Building Products Limited, 1178449 Ontario Inc., Innovative Building Materials Ltd., Jamwood Developments Inc., Charles Beliveau, Patrick J. Timony, Murray Snider, Tobin Innovative Products Inc., and Rideau Lumber (Smith's Falls) Limited in any event of the cause. The costs of the Iso-Maxx Building Products Ltd. and Donkers Harris Ltd. shall be costs in the cause.
(Sgd.) "J.D. Denis Pelletier"
Judge