Docket: T-1395-05
Ottawa, Ontario, this 16th day of December, 2005
Present: THE HONOURABLE MR. JUSTICE von FINCKENSTEIN
BETWEEN:
BMW CANADA INC. and
BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT
Plaintiffs
and
NISSAN CANADA INC.
Defendant
REASONS FOR ORDER AND ORDER
[1] BMW Canada Inc. and Bayerische Motoren Werke Aktiengesellschaft (collectively "BMW") are the registered owners of trade- marks in "M & Design" ," M3 "and " M5 ". They also claim to be the owners of unregistered trade-marks in " M "and " M6 ".
[2] BMW has brought an action for declaration and damages against Nissan Canada Inc. ("Nissan") alleging infringement and depreciation of goodwill its M3, M5 and M & Design trade-marks contrary to s. 20 and s. 22 of the Trademarks Act (the "Act"), passing off of its proprietary rights in the M, M3, M5, M6 and M & Design trade-marks contrary to section 7(b) of the Act.
[3] Pending the trial of this matter, BMW has now brought a motion for an interlocutory injunction restraining Nissan from using the claimed trade-mark "M" in association with Nissan's Infiniti automobiles and from using the trade-mark "M6 " in association with Nissan's M6 Sport Package option.
[4] Specifically BMW seeks the following:
an interim, interlocutory and permanent injunction, restraining the Defendant, its officers, directors, servants, agents, employees and all those over whom it exercises control, from either directly or indirectly infringing the Plaintiffs registered trade-marks M3, M5 and M & Design;
using the Plaintiffs' registered trade-marks M3, M5 and M & Design or any confusingly similar variation thereof, including the marks M and M6, in such a manner as to have the effect of depreciating the value of the goodwill attaching to the Plaintiffs' registered trade-marks;
directing public attention to its wares and business in such a way as to cause or be likely to cause confusion in Canada, including by using the marks M and M6 in association with automobiles, parts and accessories, between the wares of the Plaintiffs and the wares of the Defendant contrary to s. 7(b) of the Trade-marks Act;
using advertising, promoting, offering for sale or selling automobiles, parts and accessories in association with the Plaintiffs trade-marks M, M3, M5, M6 and/or M & Design or any confusingly similar variation thereof, including the marks M and M6, in association with automobiles, parts and accessories, or otherwise infringing the rights under the Plaintiffs registered trade-marks; and
BMW also seeks an order for an expedited hearing of the proceedings.
[5] BMW attaches enormous value to its M brand and has invested a lot of money into this brand as can be seen from its pleadings :
"BMW builds and manages the "M" trade-mark and the 'M' brand as a brand within the BMW brand in Canada, in other words a sub-brand. M is a very powerful sub-brand and likely the most powerful sub-brand in the automotive world...
The M trade-mark symbolizes BMW's high performance M cars. The M cars occupy the pinnacle of each BMW series: the M3 is the pinnacle of the 3 Series cars, the M5 is the pinnacle of the 5 Series cars, the soon to be introduced M6 will be the pinnacle of the 6 Series cars. The M cars high performance characteristics refer to:
"the acceleration and speed of the car, the handling capabilities of the car, braking capabilities of the car, the feel of the vehicle, the¼genes of the vehicle, ¼the racing heritage that vehicle might have."
The reputation of the M cars as high performance automobiles comes from the many successes of the M cars in the racing world. Many touring championships and other closed wheel races that have taken place all over the world have been won by M3 cars. The numerous successes in these races strengthens the association of the M trade-mark with high performance automobiles.
Moreover, BMW has expressly and actively cultivated its association with Formula One racing in its advertising, marketing and promotional materials. BMW uses commercials and advertisements which highlight Formula One racing cars or drivers. Many of the advertisements and videos for M cars use strong racing imagery.
In order to further promote the link to Formula One racing, BMW has sponsored a well known annual street festival in Montreal, namely M Night, since the year 2000. This festival is held in conjunction with the annual Formula One Race held in Montreal. M Night is well attended by people from across Canada. Over 50 to 60 M cars are displayed during that night on a blocked off section of Peel Street. The festivities include appearances by well known BMW Formula One Drivers, fashion shows and celebrity dinners. It has been described by the press as "BMW M Night, as it's called, is not only one of the biggest parties thrown during the weekend of Canada's biggest - and probably richest - sporting event. It's also a magnet for M cars from across the country¼." M night has become a tradition.
...
The M cars are the bridge that BMW has used to leverage the knowledge gained from the racing world into its street cars. The M brand is an exclusive seal of quality for customers - it promises the very best in technology, performance and quality. The technological and design link gives to M car owners a large amount of cachet and prestige...
Since 1978, BMW has spent, at least, over 300 million Canadian dollars worldwide in marketing communications alone for the M Brand and M trade-mark meaning advertising, point of sale materials, internet and direct mailings. This does not include the amounts spent on auto show exhibitions, racing efforts and other M related event marketing and non-specific brand communications which also relate to the M trade-mark."
[6] BMW wants to stop Nissan from piggybacking on this carefully created cachet (also referred to as brand equity). It alleges that the advertising campaign begun by Nissan in January 2005 featuring advertisements such as "the M is coming" featuring a giant 'M' and small Nissan logo constitute passing off and/or infringement. It will leave an impression in car afficionados and purchasers of luxury cars that there is some connection between Nissan's luxury cars and BMW's M sub brand. This will result in a deterioration of the cachet of the M sub brand.
[7] Nissan produces and sells luxury cars under the name Infiniti and owns registered trademarks in " M35" and "M45". BMW does not object to the use of these trademarks in any Nissan advertising.
[8] To be successful BMW has to meet the tripartite conjunctive test set out in RJR Macdonald Inc. v. Canada (A.G.) , (1994), 54 C.P.R. (3d) 114 requiring a successful applicant to establish that :
(1) there is a serious question to be tried;
(2) the applicant would suffer irreparable harm if the application were refused; and
(3) the balance of convenience will favour of the applicant.
[9] With respect to irreparable damages BMW argues that :
I) It firmly believes that the cachet of the "M" sub brand will suffer if it becomes associated with the allegedly inferior and more modestly priced Infinitis.
ii) The deterioration of the cachet cannot be measured as there is no measurement of the cachet prior to Nissan starting its campaign. Any measurement done now will reflect the deterioration that already occurred. If one were attempt to establish an initial base line measure of the cachet now by surveying only persons unaware of the Nissan campaign, it would result in an unrepresentative (and therefore unreliable) sample.
iii) BMW will lose control of its trade-mark unless an interlocutory injunction is granted. In support BMW relies on the following excerpt from the unreported judgement of Blair J. (as he then was) in Toronto Cricket and Skating and Curling Club v. Cricket Club Townhouse Inc (court File No. 03-CV-249314CM1) , which judgement was subsequently affirmed by the Ontario Divisional Court (2003) 27 C.P.R. (4th) 417.
[36] Loss of control over the use of a trade name or trade-mark is recognized in law as an element of actual or potential damage, even where the services provided by a defendant are not in competition with those of the plaintiff: see Orkin Exterminating Co. Inc. v. Pestco Co. of Canada (1985), 5 C.P.R. (3d) 433 (Ont. C.A.); Walt Disney Productions v. Triple Five Corp. (1992), 53 C.P.R. (3d) 129 (Alta. C.A.). Why this is so was eloquently expressed by Learned Hand J. in Yale Electric Corp. v. Robertson (1928), 26 F. 2d 972 (2nd Cir., C.A.), at pp. 973-974 in these terms:
However, it has of recent years been recognized that a merchant may have a sufficient economic interest in the use of his mark outside the field of his own exploitation to justify interposition by a court. His mark is his authentic seal; by it he vouches for the goods which bear it; it carries his name for good or ill. If another uses it, he borrows the owner's reputation, whose quality no longer lies within his own control. This is an injury, even though the borrower does not tarnish it, or divert any sales by its use; for a reputation, like a face, is the symbol of its possessor and creator, and another can use it only as a mask. And so it has come to be recognized that, unless the borrower's use is so foreign to the owner's as to insure against any identification of the two, it is unlawful.
(Emphasis added.)
[37] This passage was cited with approval in both Orkin and Walt Disney Productions, supra. In the former, Morden J.A. stated, at p.454:
... The third issue raised by the appellants is framed as follows: should damage to the property in the goodwill, if any, be presumed to have been incurred by Orkin and if so, was that presumption rebutted? Pestco submits, quite simply, that no damage to Orkin's goodwill has occurred in Canada because Pestco and Orkin are not competitors. Without damage there is no passing off. This argument is completely answered by the assertion that Orkin has suffered damages, sufficient to support a cause of action against Pestco, by virtue of its loss of control over the impact of its trade name in Ontario and the creation of a potential impediment to its using its trademark upon entering the Ontario market - both arising from Pestco's use of the name "Orkin" in Ontario.
(Emphasis added.)
[38] Here, Mr. Sternberg makes the same argument, namely that no damage has been shown to have occurred and without damages there can be no passing-off action, much less a claim for an interlocutory injunction. In my view that argument is answered by the actual or potential damage to the Plaintiff inherent in its loss of control over the impact of the use of its trade name or trade-mark and the ramifications of the Defendant's use of that name or mark respecting the preservation of its distinctiveness concerning the Plaintiff's services.
[10] Points i) relates to BMW's belief and point ii) relates to the difficulty of measuring deterioration ex post facto where there is no base line measurement. Either point is of little help in assessing irreparable damages. Point iii), in my view is also not terribly persuasive. The idea of using the mask of another as elaborated by Justice Learned Hand and picked up in Orkin supra is meant to be applied where the mark is employed, 'outside the field of the owners own exploitation'. This is not the case here as BMW and Nissan are clearly competitors in the same field; the market for luxury cars.
[11] I further note that in the instant case :
1. BMW has produced no evidence of damage to its cachet (or brand equity) up to the present time . (Cross Examination of L. S. Duffield R.R. Vol VII page 1876; also Cross Examination of J. Lawrence R.R. Vol V p. 1483);
2. BMW's witnesses testified that there has been no decrease in sales of M cars. (Cross examination of L.S. Duffield R.R. Vol VII pp. 1876-79);
3. BMW has produced no survey evidence regarding its cachet , (either before or after the commencement of Nissan's campaign) notwithstanding that one of its witnesses testified that BMW conducts sales surveys all the time. (Cross Examination of J. Lawrence R.R. Vol V page 1359)
4. BMW's own marketing expert admits that loss or brand equity can be reversed by new marketing campaigns. (Cross examination of N. Dawar R.R. Vol VI pp. 1635-36).
5. All the Nissan advertisements do not use the letter M alone, but all display the Infiniti name as well.
[12] It is well established that where an interlocutory injunction is sought to enforce an intellectual property rights and where the validity and existence of that right are seriously contested, the Court will be very hesitant to grant the injunction. See Signalisation de Montreal Inc. v. Services de Béton Universels Ltée (1992), 46 C.P.R.(3d) 199 at p. 216.
[13] It is also well established in the jurisprudence that irreparable damages have to be established by clear (and not speculative) evidence . (See Eli Lilly and Co. et al. v. Novopharm (1996), 69 C.P.R. (3d) 455 at 457-458; Turbo Resources Ltd. v. Petro Canada Inc. (1989), 24 C.P.R. (3d) 1 at 18-20; Northwest Territories v. Sirius Diamonds Ltd. (2001), 13 C.P.R. (4th) 486 at para. 80).
[14] In this case the evidence is not even speculative. BMW firmly believes that impairment of its brand equity is occurring but can offer no proof or indicator. Rather it is asking the court infer it. For the reasons set out in paragraph 10 above I am not prepared so to do in the circumstances of this case. And in light of these facts mentioned in paragraph 11 above I find that BMW has not established evidence of irreparable damages.
[15] As BMW failed to establish the irreparable damages leg of the conjunctive tripartite test of RJR Macdonald supra, there is no need for me to examine the other two legs. Accordingly no interlocutory injunction will issue.
[16] However I realize the importance of the M cachet to BMW. In addition they parties have expressed a desire to have an expedited proceedings so that any potential damages ( should they be established at trial) are kept to a minimum. I am therefore quite prepared to order that this case be put under case management with an expedited schedule so that the matter can be heard in the last quarter of 2006 or such earlier date as the parties may agree.
A Konrad W. von Finckenstein @ Judge
Date: 20051216
Docket: T-1395-05
Ottawa, Ontario, this 16th day of December, 2005
Present: THE HONOURABLE MR. JUSTICE von FINCKENSTEIN
BETWEEN:
BMW CANADA INC. and
BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT
Plaintiffs
and
NISSAN CANADA INC.
Defendant
ORDER
UPON motion, dated the 12th day of August, 2005, on behalf of the Plaintiffs, for:
1. An interim and interlocutory injunction restraining the Defendant, Nissan Canada Inc., its principals, officers, directors, employees, agents and all those over whom it exercises control from directly or indirectly:
I) infringing the Plaintiffs' registered trade-marks M3, M5 and M & Design;
ii) using the Plaintiffs' registered trade-marks M3, M5 and M & Design or any confusingly similar variation thereof, including the marks M and M6, in such a manner as to have the effect of depreciating the value of the goodwill attaching to the Plaintiffs' registered trade-marks;
iii) directing public attention to its wares and business in such a way as to cause or be likely to cause confusion in Canada, including by using the marks M and M6 in association with automobiles, parts and accessories, between the wares of the Plaintiffs and the wares of the Defendant contrary to s. 7(b) of the Trade-marks Act;
iv) using, advertising, promoting, offering for sale or selling automobiles, parts and accessories in association with the Plaintiffs' trade-marks M, M3, M5, M6 and/or M & Design or any confusingly similar variation thereof, including the marks M and M6, in association with automobiles, parts and accessories, or otherwise infringing the rights under the Plaintiffs' registered trade-marks;
2. An Order for an expedited hearing of the proceeding.
3. The costs of this motion; and
4. Such further and other relief as this Honourable Court may seem just.
THIS COURT ORDERS that:
1) that this motion be dismissed with costs to the Defendant;
2) that this action shall continue as a case managed proceeding;
3) that this matter shall proceed on an expedited schedule with a trial targeted for the fourth quarter of 2006 in Toronto, Ontario (or such earlier date as the parties agree and the Judicial Administrator assigns);
4) that as soon as a case management judge or prothonotary is appointed, the parties shall fix a hearing with such judge or prothonotary and at such hearing present a schedule for subsequent proceedings so as to meet the target date for a fourth quarter trial.
A Konrad W. von Finckenstein @ Judge
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1395-05
STYLE OF CAUSE: BMW CANADA INC., ET AL v. NISSAN CANADA INC.
PLACE OF HEARING: Toronto
DATE OF HEARING: 12-DEC-05
REASONS FOR ORDER
AND ORDER: Justice von Finckenstein
DATED: December 16, 2005
APPEARANCES:
Mr. Ronald E. Dimock FOR THE PLAINTIFF(S)
Mr. Henry Lue
Mr. Ahmed Bubulia
Ms. Carol Hitchman FOR THE DEFENDANT(S)
SOLICITORS OF RECORD:
DIMOCK STRATTON LLP FOR THE PLAINTIFF(S)
Toronto, Ontario
HITCHMAN & SPRINGINGS FOR THE DEFENDANT(S)
Toronto, Ontario