Date: 20241211
Docket: T-245-23
Citation: 2024 FC 2017
Ottawa, Ontario, December 11, 2024
PRESENT: The Honourable Justice Fuhrer
BETWEEN: |
ARMOUR TRANSPORT INC |
Plaintiff |
and |
2098763 ALBERTA LTD. DBA ARMOUR TRUCKING OF EDMONTON, MANPREET DHILLON, AND JOBANBIR LEHAL |
Defendants |
JUDGMENT AND REASONS
I. Overview
[1] Armour Transport Inc. [Armour or Plaintiff], brings this motion in writing pursuant to rule 369 of the Federal Courts Rules, SOR/98-106 [Rules], to remove the Statement of Defence from the Court file and to grant default judgment against the Defendants, with costs.
[2] The Defendants, although served, have not responded to this motion nor requested any extension of time to do so.
[3] In a separate Order and Reasons, having neutral citation 2024 FC 2006, the Court ordered the removal of the Statement of Defence from the record [Removal Order] and indicated that costs would be dealt with in connection with the disposition of the motion for default judgment.
[4] Having considered the Plaintiff’s motion record, including written submissions, I find that the Plaintiff has satisfied the applicable tests for the granting of default judgment against the corporate Defendant only. For the reasons below, the Plaintiff’s motion will be granted in part as against the corporate Defendant but dismissed as against the individual Defendants.
II. Background
[5] Because the Plaintiff’s motion is undefended, the only evidence of record is the affidavit of Kyle Power [Power Affidavit], in-house legal counsel with the Seaboard Transport Group of Companies which includes Armour. The factual findings in these reasons are based largely on the Power Affidavit, including attached exhibits.
A. The Parties
[6] The Plaintiff was incorporated under the laws of New Brunswick and operates primarily in Atlantic Canada. It provides commercial transportation services, including long-haul trucking, logistics, warehousing, courier services, and freight brokerage, and offers transportation and logistics solutions across Canada and into the United States.
[7] The corporate Defendant, 2098763 Alberta Ltd. dba Armour Trucking of Edmonton [AlbertaCo or corporate Defendant], was incorporated under the laws of Alberta. Its registered business or trade name is “Armour Trucking.”
The individual Defendants, Manpreet Dhillon and Jobanbir Lehal, are the directors and operating minds of AlbertaCo. The Defendants provide trucking services, including the transportation of goods by truck and local delivery trucking to the public in Canada. The majority of their business is in Edmonton, Alberta and Mississauga, Ontario.
B. Armour’s Trademarks
[8] Armour owns the following Canadian registered trademarks:
Trademark
|
Application and Registration Numbers
|
Goods and Services
|
|---|---|---|
(The drawing is lined for the colours red and blue which colours are claimed as features of the mark.)
|
Application No.: 0860049 Registration No.: TMA511627 |
Transportation of goods by truck; provision of terminal facilities, namely for the on loading and off loading of goods; the provision of warehousing services. |
(The drawing is lined for the colours red and blue which colours are claimed as features of the mark.)
|
Application No.: 0860050 Registration No.: TMA511626 |
Transportation of goods by truck; provision of terminal facilities, namely for the on loading and off loading of goods; the provision of warehousing services. |
(The word ARMOUR and the upper stripe are red. The words TRANSPORT and INC. and the lower stripe are blue. The colours red and blue are claimed as features of the trade-mark.)
|
Application No.: 0872043 Registration No.: TMA519007 |
Transportation of goods by truck; provision of terminal facilities, namely for the on loading and off loading of goods; the provision of warehousing services. |
|
Application No.: 1237323 Registration No.: TMA701712 |
Envelopes. Courier services, local delivery trucking, warehousing. |
(Colour is claimed as a feature of the mark. The trade-mark consists of the letters ACS in red with a blue triangle above the letter ‘A’ and four blue lines parallel to the left side of the letter ‘A’. Below the foregoing are the words ARMOUR COURIER SERVICES in blue.)
|
Application No.: 1237328 Registration No.: TMA701713 |
Envelopes. Courier services, local delivery trucking, warehousing. |
[9] Although unregistered, the Plaintiff has used the word mark ARMOUR TRANSPORT throughout Canada since at least 1989.
[10] I refer in these reasons to the above trademarks, both registered and unregistered, as the “Armour Marks.”
C. Events Preceding Armour’s Legal Action
[11] Armour discovered the Defendants’ use of the trade name Armour Trucking with the design marks depicted below [Impugned Branding] upon seeing a truck with the Impugned Branding on Highway 401 in Ontario in late 2021.
[12] In a phone discussion between the Plaintiff’s general counsel and the individual Defendant, Jobanbir Lehal in December 2021, Mr. Lehal indicated that the Defendants were not willing to stop using or to change the Impugned Branding.
[13] The Plaintiff’s Canadian counsel in this matter sent a cease and desist letter to the Defendants in January 2022. Receiving no response, the Canadian counsel sent a follow up letter to the Defendants in April 2022. Again receiving no response, Canadian counsel sent a draft Statement of Claim to the Defendants in January 2023 by registered mail, stating that it would be filed in February 2023 if the Defendants did not respond to the earlier letters. Canadian counsel received no response and filed the claim.
[14] As early as August 2022 and subsequently, incidents of actual confusion among Armour’s existing and potential customers came to its attention.
D. Armour’s Legal Action, including Procedural History
[15] Armour started this action on February 7, 2023 against the Defendants for passing off, trademark infringement, and depreciation of goodwill under sections 7, 19, 20, and 22 of the Trademarks Act, RSC 1985, c T-13 [TMA]. See Annex “A”
below for applicable legislative provisions.
[16] Among other things, Armour seeks corresponding declarations, injunctions restraining the Defendants’ use of the Armour Marks, monetary relief, including interest, and an order requiring the Defendants to change their registered business name and remove infringing marks and branding from their vehicles. Armour also seeks its costs.
[17] A week after it was filed, Armour served the Statement of Claim on the individual Defendants who did not defend the action. Armour encountered difficulties, however, serving the corporate Defendant, necessitating in turn an extension of time, an order for substituted service, and an order validating service, all of which the Court granted in succession to the Plaintiff.
[18] In granting the validation order, then Associate Judge Duchesne was satisfied, based on Armour’s evidence in the motion for such order, that the corporate Defendant was evading service. Pursuant to the validation order, the permitted service of the claim on the corporate Defendant by mail was effected as of August 11, 2023. In addition, the order validated the previous service in February 2023 on the individual Defendants.
[19] Prior to the corporate Defendant’s deadline for filing a Statement of Defence, the Plaintiff’s Canadian counsel was contacted by lawyers with two different law firms who indicated they were consulted or might be retained by the Defendants. The Plaintiff’s Canadian counsel did not receive any confirmation of retainer, however, from either lawyer.
[20] Mr. Lehal subsequently contacted the Plaintiff’s Canadian counsel seeking consent to represent the corporate Defendant. He was informed that Armour would not consent to that request. In response to a later request for an extension of time (two days after the deadline), Armour consented to an extension until September 15, 2023 for the corporate Defendant to file its Statement of Defence, noting that it must be filed in accordance with rule 120 of the Rules.
[21] While AlbertaCo filed a Statement of Defence, it did not comply with rule 120, and was accepted erroneously by the Registry. The individual Defendants have not filed any defence.
[22] Notwithstanding Armour’s refusal to consent to self-representation, the Statement of Defence was signed by Jobanbir Lehal acting on behalf the corporate Defendant. Although Mr. Lehal’s signature was accompanied by an attestation by a lawyer, there is an added note that reads: “Only signatures attested, The [sic] lawyer does not take any responsibilities for the contents NO LEGAL ADVICE GIVEN.”
[23] In addition, the Statement of Defence was accompanied by a “Resolution to Appoint Jobanbir Lehal as Signing Authority and File a Statement of Defence on Behalf of Armour Trucking.”
The Resolution is on “Armour Trucking”
letterhead and specifically authorizes Mr. Lehal “to review, prepare, and file a statement of defence on behalf of Armour Trucking in response to the statement of claim…”
[24] Further to the Plaintiff’s motion, the Court issued an order under subrule 74(2) of the Rules inviting the parties to make submissions about whether the Statement of Defence should be removed from the record pursuant to subrule 74(1) [Show Cause Order]. The Show Cause Order specifically notes that “the Statement of Defence is irregular; its acceptance for filing was made in error; and the Defendants have taken no steps to remedy the non-compliance with rule 120 or to seek an extension of time for doing so, despite the proper service of the Plaintiff’s motion record.”
[25] Having considered the parties’ submissions in response to the Show Cause Order, the Court determined the Removal Order would issue and that the Court would dispose of the balance of Armour’s motion for default judgment separately.
III. Issues
[26] I determine that the present motion raises the following issues:
Should the Court grant default judgment against the Defendants, in particular:
(1)Are the Defendants in default?
(2)Has Armour established its claims under the TMA?
Are the individual Defendants personally liable for the corporate Defendants’ conduct?
To what remedies, if any, is Armour entitled?
To what costs, if any, is Armour entitled?
[27] I deal with each issue in turn.
IV. Analysis
[28] I find that the Defendants are in default and that the Plaintiff has established its claims in part, thus warranting default judgment in its action on the terms outlined below.
A. The Court grants default judgment against the corporate Defendant
[29] Armour asks the Court to grant default judgment against the Defendants pursuant to rule 210 of Rules. The present motion does not seek relief for passing off.
[30] On a motion for default judgment, the plaintiff must establish that: (a) the defendant did not file a defence within the prescribed timeline; and (b) the plaintiff has demonstrated its claim on a balance of probabilities. All allegations in the statement of claim are deemed to be denied: Trimble Solutions Corporation v Quantum Dynamics Inc, 2021 FC 63 at para 35 [Trimble].
[31] Default judgment is discretionary, and the Court must scrutinize a plaintiff’s evidence with care. A plaintiff must provide “sufficiently clear, convincing and cogent evidence”
to establish its claim on the civil standard: McDowell v A Drip of Honey, 2024 FC 453 at para 22; Trimble, above at paras 36-37.
[32] Rule 211 of the Rules provides that default judgment shall not be granted where service of the statement of claim was effected pursuant to substituted service, unless the Court is satisfied that default judgment is just in the circumstances. The Court must be satisfied that the defendant is aware of the action; the Court may also consider a defendant’s willingness to engage with the court process and its failure to comply with the Rules: Kaira District Co‑operative Milk Producers’ Union Limited v AMUL Canada, 2021 FC 636 at paras 43-44.
(1) Are the Defendants in default?
[33] The short answer to this question is yes.
[34] Pursuant to paragraph 204(1)(a) of the Rules, the individual Defendants were required to file a defence within thirty days after being served with the Statement of Claim. Because they failed to file a defence by March 17, 2023, I find that they are in default.
[35] With respect to AlbertaCo, Armour submits that it has not provided a reasonable explanation for its failure to file a Statement of Defence that complies with the Rules. Armour alleges that AlbertaCo had actual knowledge of the claim by February 14, 2023. I agree on both points; hence, the Removal Order. Further, because the individual Defendants are the sole directors of AlbertaCo, it cannot be said, in my view, that the corporate Defendant was unaware of the claim at any material time since at least February 2023 when the individual Defendants were served.
[36] Although rule 211 cautions against rendering judgment against a defendant in default where service of the claim was effected through substituted service, I determine that it is just to do so in the particular circumstances here. The corporate Defendant was found to have evaded service. The individual Defendants (i.e. the corporate Defendant’s sole directors) were timely served, however. I thus am satisfied that the Statement of Claim came to the corporate Defendant’s attention: Canada (Citizenship and Immigration) v Rubuga, 2015 FC 1073 at para 48. More to the point, I note that none of the Defendants has responded to Armour’s motion for default judgment, with which they properly were served.
(2) Has Armour established its claims under the TMA?
[37] Leaving aside the passing off claims under paragraphs 7(b) and 7(c) of the TMA, for which Armour does not seek relief on this motion, I find that Armour otherwise has established its claims for trademark infringement and depreciation of goodwill on a balance of probabilities in respect of the following registered Armour Marks but only as against the corporate Defendant: ARMOUR & Design, registration No. TMA511627; ARMOUR TRANSPORTATION SYSTEMS & Design, registration No. TMA511626; and ARMOUR TRANSPORT INC & Design, registration No. TMA519007 [Infringed Armour Marks].
[38] In light of the Removal Order and the resultant absence of any validly filed Statement of Defence by the Defendants, the Court must treat the allegations in the Statement of Claim as denied. Further, Armour bears the burden of leading evidence that permits the Court to determine, on a balance of probabilities, that infringement and depreciation of goodwill have occurred: Louis Vuitton Malletier SA v Yang, 2007 FC 1179 at para 4.
(a) Infringement Legal Principles and Analysis
[39] Under section 19 of the TMA, a trademark owner has the exclusive right to use its registered trademark throughout Canada in respect of the goods and services listed in the registration. That right is deemed infringed, according to section 20, by a person who sells, distributes, or advertises goods or services in association with a confusing trademark or trade name.
[40] Subsections 6(2) and 6(4) of the TMA contemplate respectively confusion between two trademarks, and confusion between a trademark and a trade name, if the use of both in the same area would be likely to lead to the inference that the goods or services associated with the business carried on under the trademark, or the trade name as the case may be, and those associated with the trademark are manufactured, sold, leased, hired or performed by the same person, whether or not the goods or services are of the same general class or appear in the same class of the Nice Classification.
[41] More granularly, subsection 6(5) of the TMA guides the confusion analysis with reference to the following five non-exhaustive factors to consider, in the context of “all the surrounding circumstances”
: (a) the inherent distinctiveness of the trademarks or trade names and the extent to which they have become known; (b) the length of time the trademarks or trade names have been in use; (c) the nature of the goods, services or business; (d) the nature of the trade; and (e) the degree of resemblance between the trademarks or trade names in appearance or sound or in the ideas suggested by them.
[42] The test to be applied in assessing these factors, on a balance of probabilities, is one of first impression in the mind of a casual consumer somewhat in a hurry who has no more than an imperfect recollection of the prior trademark and who does not stop to consider the differences and similarities between the marks or names in issue. The Supreme Court further guides that the confusion analysis exercise is fact- and context-specific in each situation: Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23 [Veuve] at para 20.
[43] Bearing these principles in mind, I turn to a consideration of the subsection 6(5) factors.
(i) Paragraph 6(5)(e) – Degree of Resemblance
[44] I find that this factor unequivocally favours the Plaintiff in respect of the Infringed Armour Marks.
[45] It generally is appropriate to begin the analysis with the degree of resemblance under paragraph 6(5)(e). If the marks or names do not resemble one another, it is unlikely that even a strong finding on other factors would lead to a determination of likelihood of confusion. In other words, other factors are only significant if the marks are identical or very similar: Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27 at para 49; 1196278 Ontario Inc (Sassafraz) v 815470 Ontario Ltd (Sassafras Coastal Kitchen & Bar), 2022 FC 116 at para 30.
[46] Here, the common and dominant element of the Infringed Armour Marks and the Impugned Branding is the identical word ARMOUR. To the extent that the attention of a casual, hurried consumer would be drawn to the word ARMOUR in the parties’ marks, this would contribute significantly, in my view, to the resemblance of their marks in sound, appearance and in the ideas suggested. I determine this is less so, however, in the case of the Plaintiff’s two registered Armour Marks that are dominated by the initialism ACS and relate to courier services, namely, the Armour Marks which are the subject of registration Nos. TMA701712 and TMA701713.
[47] Further, the colour red is a significant feature of both parties’ design marks, thus enhancing, in my view, the degree of their resemblance in appearance.
(ii) Paragraphs 6(5)(a) and (b) – Inherent Distinctiveness, Extent to which Known, and Length of Time in Use
[48] I determine that inherent distinctiveness is a neutral factor, while the extent known and length of time in use clearly favour the Plaintiff.
[49] The inherent distinctiveness of both parties’ marks resides in the word ARMOUR. The Plaintiff’s evidence is that Armour was founded by the late Gordon Armour in the 1940s, who lived from 1910-1996. Although the surname significance of the word “Armour”
diminishes (in the sense of weakens) the inherent distinctiveness of the marks, I find such diminishment is offset in part by the primary alternative meanings of the word as shown by the Plaintiff’s evidence, that is a defensive covering for the body and a suit of mail. In my view, these meanings are not descriptive or suggestive of transportation or trucking services (and related services) per se.
[50] More significantly, I find that any weakness in the inherent distinctiveness of the Infringed Armour Marks is further offset by the extent to which they have become known and the length of time they have been in use in Canada, which factors favour the Plaintiff.
[51] While the Power Affidavit describes the Plaintiff’s sales as “substantial,”
the affidavit is lacking in any sales figures. I am prepared to infer, however, that a business “providing services across Canada and into the United States with nearly 2,000 employees, 24 terminals, 4,000 pieces of equipment, and 700,000 square feet of warehousing,”
represents a sizeable enterprise. I add, however, that in my view, Armour’s participation in industry trade shows and job fairs, as well as the number of “followers”
and “likes”
on social media platforms, without any contextual evidence, do not in themselves corroborate that the Plaintiff’s business is substantial.
[52] Further, the business has received many industry and customer accolades and recognition, spanning the last two decades. According to Mr. Power, “the Plaintiff is consistently recognized in Today's Trucking list of the Top 10 Carriers in Canada.”
Armour performs its transportation services in trucks displaying the design mark registered under registration No. TMA511626 as follows:
[53] The Defendants similarly display the Impugned Branding on their trucks as follows:
[54] Mr. Power deposes that the Defendants only started using the Impugned Branding in 2018 as contrasted with the Plaintiff’s expansion by 1966 to 10 trucks and 11 employees associated with the “Armour brand.”
Although the Power Affidavit could have been clearer about what use was made of the Armour Marks in the early days, I note that registration Nos. TMA511627, TMA511626 and TMA519007 (i.e. the Infringed Armour Marks) all are based on use of the trademarks in Canada since at least as early as 1989, which substantially predates 2018.
(iii) Paragraphs 6(5)(c) and (d) – Nature of Goods, Services or Business, and Channels of Trade
[55] I agree with the Plaintiff that although it offers a broader range of services than the Defendants, that range encompasses the very services offered by the Defendants. Further, they both operate in the transportation (particularly by truck) and logistics space. In other words, these factors also favour the Plaintiff.
[56] Having considered and weighed the above factors, I am satisfied that the Plaintiff has established a likelihood of confusion between its design marks registered under registration Nos. TMA511627, TMA511626 and TMA519007 (i.e. the Infringed Armour Marks), and the Impugned Branding, such that the Plaintiff has made out its claim for infringement under section 20 of the TMA. While not necessary, this finding nonetheless is reinforced by the instances of actual confusion described in the Power Affidavit (see Venngo Inc v Concierge Connection Inc (Perkopolis), 2017 FCA 96 at para 73, leave to appeal refused, 2017 CanLII 78708 (SCC)) and discussed in connection with the issue of depreciation of goodwill addressed below.
[57] Success on a claim for infringement under section 19 of the TMA, however, requires a plaintiff to establish that the marks in issue are identical: Sandhu Singh Hamdard Trust v Navsun Holdings Ltd, 2019 FCA 295 [Hamdard Trust] at para 20; Bean Box, Inc v Roasted Bean Box Inc, 2022 FC 499 at paras 18-19. I find that Plaintiff’s evidence here does not show the requisite identicalness.
(b) Depreciation of Goodwill Legal Principles and Analysis
[58] I am satisfied that Armour has shown the corporate Defendant’s activities likely, if not actually, depreciate the value of the goodwill attached to the Infringed Armour Marks.
[59] Section 22 of the TMA provides that no one can use the registered trademark of another in a way likely to depreciate the value of the goodwill attached to the trademark.
[60] To succeed in a claim for depreciation of goodwill, a plaintiff must meet the applicable four‑part, conjunctive test: (i) the defendant has used the claimant’s registered trademark with goods or services, regardless whether they are competitive, with those of the claimant; (ii) the claimant’s registered trademark is sufficiently well known to have a significant degree of goodwill attached to it, although there is no requirement that the trademark be well known or famous; (iii) the defendant’s use of the trademark was likely to have an effect on that goodwill (in other words, there was a linkage); and (iv) the likely effect is to depreciate or cause damage to the value of the goodwill: Veuve, above at para 46.
[61] It is not a requirement that the challenged trademark be identical to the registered trademark: Veuve, above at para 48. That said, goodwill and depreciation are not defined in the TMA. Veuve addresses these gaps (at paras 50, 63) by guiding that “[i]n ordinary commercial use, [goodwill] connotes the positive association that attracts customers towards its owner’s wares or services rather than those of its competitors,”
while the ordinary dictionary meaning of “depreciate”
means to “lower the value of,”
as well as to “disparage, belittle, underrate.”
[62] In addition, a trademark’s value can be lowered when different users bandy it about, or when their actions cause “blurring”
(i.e. “whittling away”
the trademark’s ability to distinguish the owner’s products and attract consumers) or “dilution,”
resulting in lesser distinctiveness: Veuve, above at paras 63-64; H-D USA, LLC v Varzari, 2021 FC 620 [Varzari] at para 49.
[63] Put another way (paraphrasing from Clairol to align more closely with Veuve), section 22 prohibits a competitor’s use of the owner’s trademark for the purpose of appealing to the owner’s customers in an effort to weaken their habit of buying what they have bought before or the likelihood that they would buy the owner’s goods or whatever binds them to the owner’s goods so as to change their buying habits: Clairol International Corp et al v Thomas Supply and Equipment Co et al, 1968 CanLII 1280 (CA EXC), 2 Ex CR 552 at 575.
[64] Non‑exhaustive factors to consider in assessing the existence of goodwill include the degree of recognition of the mark within the relevant universe of consumers, the volume of sales and the depth of market penetration of products associated with the claimant’s mark, the extent and duration of advertising and publicity accorded the claimant’s mark, the geographic reach of the claimant’s mark, its degree of inherent or acquired distinctiveness, whether products associated with the claimant’s mark are confined to a narrow or specialized channel of trade, or move in multiple channels, and the extent to which the mark is identified with a particular quality: Veuve, above at para 54.
[65] In addition, the Court must consider the effect on goodwill or linkage from the perspective of the “somewhat‑hurried consumer;”
absent linkage, there can be no impact, whether positive or negative, on goodwill: Veuve, above at para 56. Rooted in the linkage concept is the way a trademark operates; trademarks work as a purchasing decision shortcut and, thus, perform an important function in the market: Mattel, Inc v 3894207 Canada Inc, 2006 SCC 22 at para 21.
[66] The Power Affidavit describes one of its vendors becoming concerned about doing business with the Plaintiff after mistaking the bad credit of “Armour Trucking”
for that of the Plaintiff.
[67] Mr. Power also recounts instances of actual confusion involving a customer in Quebec, Kruger Products Inc., that loaded the corporate Defendant’s trailers on multiple occasions, mistaking them for Armour’s trailers. According to Mr. Power, even after the error is discovered, Kruger will dispatch the Armour Trucking (i.e. AlbertaCo) trailers to perform the work that otherwise would be entrusted to the Plaintiff because of the time and cost involved in offloading and reloading the Plaintiff’s trailers, resulting in lost business.
[68] Mr. Power further attests to a complaint by a manager at a recipient of a Kruger shipment in the US delivered by AlbertaCo, when the Plaintiff had no shipments to that facility at that time. The complaint involved a gate apparently damaged by AlbertaCo.
[69] While the Power Affidavit shows negative comments received online by AlbertaCo, in my view it is speculative to argue that individuals will mistake the corporate Defendant for the Plaintiff by reason of the online negative comments alone, without something more. In other words, I am not convinced the Plaintiff has established the necessary linkage described in Veuve insofar as the negative comments received by AlbertaCo are concerned.
[70] That said, considering the totality of its evidence, I find that the Plaintiff also has made out a likelihood of depreciation of goodwill.
[71] First, I find the Impugned Branding, while not identical, is “sufficiently similar”
(per Veuve, above at para 38) to the Infringed Armour Marks having registration Nos. TMA511627, TMA511626 and TMA519007 depicted above; further, there is substantial overlap between the Plaintiff’s transportation services and the Defendants’ trucking services.
[72] Second, I determine that the Infringed Armour Marks are sufficiently well known to have a significant degree of goodwill attached to them. Here, I have taken into account my findings regarding the subsection 6(5) factors in the context of likely confusion which can have a bearing on the depreciation of goodwill analysis, notwithstanding the different tests: Hamdard Trust, above at paras 47-48.
[73] Third, I find the Defendants’ use of the Impugned Branding was (and is) likely to have an effect on that goodwill by evoking in customers of the parties’ services a mental association between the Impugned Branding and the Infringed Armour Marks (in other words, there was – and is – a linkage).
[74] Fourth, I conclude that the likely effect is to depreciate or cause damage to the value of the goodwill attached to the Infringed Armour Marks.
B. The individual Defendants are not personally liable for the corporate Defendants’ conduct
[75] Contrary to the Plaintiff’s arguments, I am not persuaded that the individual Defendants’ conduct in this matter rises to a level that demands the lifting of the corporate veil.
[76] For there to be personal liability in the context of intellectual property infringement, “there must be circumstances showing that the individual’s purpose was not just ordinary course business activity ‘but the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it’”
: Vachon Bakery Inc v Racioppo, 2021 FC 308 [Vachon] at para 120, citing Mentmore Manufacturing Co, Ltd et al v National Merchandising Manufacturing Co Inc et al, 1978 CanLII 2037 (FCA), 89 DLR (3d) 195 [Mentmore] at 204-205
[77] The kind of participation in the acts of a corporation that would give rise to personal liability involve a “degree and kind of personal involvement by which the director or officer makes the tortious act his own”
: Petrillo v Allmax Nutrition Inc, 2006 FC 1199 [Petrillo] at para 30, citing Mentmore, above. This principle applies not only to large corporations but also to small, closely held companies: Petrillo, at para 31. As observed by the court in Mentmore, “[t]here is no reason why the small, one-man or two‑man corporation should not have the benefit of the same approach to personal liability merely because there is generally and necessarily a greater degree of direct and personal involvement in management on the part of its shareholders and directors.”
[Emphasis added.]
[78] The Court of Appeal for Ontario later clarified that there must be “some conduct on the part of those directing minds that is either tortious in itself or exhibits a separate identity or interest from that of the corporations such as to make the acts or conduct complained of those of the directing minds”
: Petrillo, above at para 29, citing Normart Management Ltd v West Hill Redevelopment Co Ltd., 1998 CanLII 2447 (ONCA), 155 DLR (4th) 627 [Normart]. This Court recently has held that personal liability on the part of an individual who owns or controls a company will not arise even if the individual was the one who decided the company would undertake the alleged misconduct: Vachon, above at paras 120-122. See also Zero Spill Systems (Int’l) Inc v 614248 Alberta Ltd, 2009 FC 70 [Zero Spill] at para 19.
[79] Further, it is not enough for a plaintiff to plead personal liability on the part of an officer or director in a statement of claim in the hope that evidence to support the allegation will be uncovered during discovery: Zero Spill, above at para 20.
[80] Here, there is only one paragraph in Armour’s Statement of Claim devoted to the individual Defendants, Manpreet Dhillon and Jobanbir Lehal, who are described as the directors and the principal controlling minds of AlbertaCo. The claim asserts that these individuals directed, ordered, authorized, aided and abetted the conduct of the corporate Defendant, about which the Plaintiff complains, and that they have done so with full knowledge and reckless disregard for Armour’s rights, for the purpose of deceiving the average Canadian consumer and securing profits which rightfully belong to Armour.
[81] I find, however, that there is insufficient evidence that the individual Defendants participated in any act, including permitting or authorizing the corporate Defendant to use the Impugned Branding, that rises to the level of conduct described in Mentmore and Normart that would attract personal liability and warrant lifting the corporate veil. I arrive at this conclusion even though the individual Defendants were made aware of the Plaintiff’s objections to their Impugned Branding, possibly as early as December 2021 when the Plaintiff’s general counsel and the individual Defendant, Jobanbir Lehal spoke, but certainly by the time of receipt of the Plaintiff’s first cease and desist letter sent in January 2022: Vachon, above at para 123.
C. Armour is entitled to some of the remedies it seeks
[82] I am satisfied that Armour is entitled, under section 53.2 of the TMA, to compensatory and punitive damages as against the corporate Defendant, as well as a permanent injunction and other relief related to the cessation of use of the Impugned Branding. See BBM Canada v Research In Motion Limited, 2011 FCA 151 at paras 23-24.
(1) Compensatory Damages
[83] That Armour has not provided proof of the actual quantum of damages it has suffered because of the infringement of, and the depreciation of goodwill attached to, the Armour Marks, does not disentitle Armour to a minimum or nominal compensatory damages award: Mars Canada Inc v John Doe #1 (King Tuts Cannabis), 2022 FC 1193 at para 50; Varzari, above at paras 54-56.
[84] Further, difficulty in assessing damages, does not relieve the Court from doing the best it can in assessing them: Ragdoll Productions (UK) Ltd v Jane Doe, 2002 FCT 918 at para 40, citing Aluminum Co of Canada Ltd et al v Tisco Home Building Products (Ontario) Ltd et al (1977), 33 CPR (2d) 145 (FCTD) at 163-164.
[85] While Armour requests nominal damages in the amount of $20,000 per Defendant, I determine that a just and proportionate total award of damages in the circumstances is $20,000, in light of my finding that the individual Defendants are not liable personally.
(2) Punitive Damages
[86] Punitive damages may be awarded in exceptional cases of high‑handed, malicious, arbitrary or highly reprehensible misconduct that represents a marked departure from ordinary standards of decent behaviour: Bell Helicopter Textron Canada Limitée v Eurocopter, société par actions simplifiée, 2013 FCA 219 at para 163, citing Hill v Church of Scientology of Toronto, 1995 CanLII 59, [1995] 2 SCR 1130 at para 196; Whiten v Pilot Insurance Co, 2002 SCC 18 at para 36.
[87] Punitive damages also may be warranted where compensatory damages may be viewed as little more than a “licence fee”
to disregard the rights of others: TFI Foods Ltd v Every Green International Inc, 2021 FC 241 [TFI Foods] at para 68.
[88] While I am not persuaded that the Defendants’ conduct was high‑handed, malicious, arbitrary or highly reprehensible, I am satisfied that the amount of compensatory damages awarded in this matter represent little more than a licence fee, especially taking into account the five years during which infringement occurred before the Plaintiff commenced its action. Further, when confronted with the Plaintiff’s concerns in December 2021, the Defendants indicated that they were unwilling to stop using or to change the Impugned Branding; they continued their course of conduct which included plans for expansion, and evasion of service of the Plaintiff’s claim necessitating substituted service.
[89] Although the Plaintiff has requested punitive damages of $25,000 per Defendant, I determine that a just and proportionate total award of punitive damages in the circumstances is $25,000, in light of my finding that the individual Defendants are not liable personally, with a view to accomplishing the objectives of retribution, deterrence and denunciation: TFI Foods, above at para 68.
(3) Injunctive and Related Relief
[90] As mentioned, the Defendants have not responded to this motion and the corporate Defendant’s Statement of Defence has been removed from the record. I determine that a permanent injunction flows from the Court’s findings of infringement and depreciation of goodwill in respect of the Infringed Armour Marks by the corporate Defendant.
[91] The corporate Defendant also will be required to withdraw or cancel the trade name registration for “Armour Trucking”
(TN20987723), and to remove “Armour”
and “Amour Trucking”
from all trucks, vehicles, equipment, websites, etc. In addition, the corporate Defendant will be required to notify clients, customers and employees of the name change.
D. Armour is entitled to costs
[92] Armour seeks a lump-sum costs award of $100,000 from the Defendants, jointly and severally, for the action, including this motion. Because the action will be dismissed against the individual Defendants, however, I determine that an appropriate lump-sum costs award in the circumstances is $35,000 (roughly one third of the proposed amount, and including costs for responding to the Defendants’ rule 120 motion). I exercise my discretion accordingly under rule 400 in making this award of costs.
V. Conclusion
[93] For the above reasons, the Plaintiff’s motion will be granted in part, with default judgment awarded against the corporate Defendant but dismissed against the individual Defendants. The corporate Defendant has infringed and depreciated the goodwill attached to the Infringed Armour Marks, thus warranting injunctive and related relief, as well as compensatory and punitive damages. The corporate Defendant will pay the Plaintiff lump-sum costs in the amount of $35,000, inclusive of costs for responding to the Defendants’ rule 120 motion. Subject to sections 36-37 of the Federal Courts Act, RSC 1985, c F-7, the Plaintiff also is entitled to pre- and post-judgment interest on the terms outlined below.
JUDGMENT in T-245-23
THIS COURT’S JUDGMENT is that:
The Plaintiff’s motion is granted in part as against 2098763 Alberta Ltd, dba Armour Trucking of Edmonton [corporate Defendant].
The corporate Defendant is declared to have:
infringed the following registered trademarks of the Plaintiff, contrary to section 20 of the Trademarks Act, RSC 1985, c T-13: ARMOUR & Design, registration No. TMA511627; ARMOUR TRANSPORTATION SYSTEMS & Design, registration No. TMA511626; and ARMOUR TRANSPORT INC & Design, registration No. TMA519007 [collectively, Infringed Armour Marks]; and
used the Infringed Armour Marks in a manner that is likely to have the effect of depreciating the value of the goodwill attaching to them, contrary to subsection 22(1) of the Trademarks Act.
The corporate Defendant by itself, and by its employees, partners, agents, officers, and directors, in such capacity, are enjoined permanently from, directly or indirectly, further:
infringing the Infringed Armour Marks;
depreciating the value of the goodwill attaching to the Infringed Armour Marks; and
using the words
“Armour”
and“Amour Trucking”
including any and all words, phrases, logos, business names, trade names, or trade dress containing“Armour”
or“Amour Trucking”
and any other marks that could be deemed confusingly similar to“Armour”
or“Amour Trucking”
and any other logos or branding comprising or containing“Armour”
or“Armour Transport”
used by the Plaintiff, as or in a trademark or trade name, or for any other purpose in a manner likely to infringe or to depreciate the value of the goodwill attached to the Infringed Armour Marks;The corporate Defendant immediately shall: (a) withdraw or cancel the trade name registration for
“Armour Trucking”
(TN20987723); (b) remove or cause to be removed all reference to and use of the words“Armour”
and“Armour Trucking”
from all trucks, vehicles, equipment, websites, advertising, branding, merchandise, stationery, invoices, licences, and registrations; and (c) notify all of its existing clients, customers, and employees that the corporate Defendant no longer operates under the“Armour”
or“Armour Trucking”
brand.The corporate Defendant shall pay to Plaintiff forthwith: (a) compensatory damages in the amount of $20,000; and (b) punitive damages in the amount of $25,000.
The Plaintiff is awarded lump-sum costs in the amount of $35,000, for the action, including this motion, and for responding to the Defendants’ rule 120 motion, payable forthwith by the corporate Defendant.
The compensatory damages payable under this judgment shall bear pre-judgment interest at a rate of 3% per year from February 7, 2023, to the date of this Judgment.
All amounts payable under this Judgment shall bear post-judgment interest at a rate of 5% per year from the date of this Judgment.
This motion and the action are dismissed as against the individual Defendants, Manpreet Dhillon and Jobanbir Lehal.
"Janet M. Fuhrer"
Judge
Annex “A”
: Relevant Provisions
Federal Courts Rules (SOR/98-106)
Règles des Cours fédérales (DORS/98-106)
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Trademarks Act (R.S.C., 1985, c. T-13)
Loi sur les marques de commerce (L.R.C. (1985), ch. T-13)
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FEDERAL COURT
SOLICITORS OF RECORD
DOCKET:
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T-245-23
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STYLE OF CAUSE:
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ARMOUR TRANSPORT INC v 2098763 ALBERTA LTD. DBA ARMOUR TRUCKING OF EDMONTON, MANPREET DHILLON, AND JOBANBIR LEHAL |
MOTION IN WRITING CONSIDERED AT OTTAWA, ONTARIO PURSUANT TO RULE 369 OF THE FEDERAL COURTS RULES
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JUDGMENT AND REASONS: |
FUHRER J.
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DATED:
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December 11, 2024
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APPEARANCES:
Erin Best Manon Landry |
For The PLAINTIFF |
SOLICITORS OF RECORD:
Stewart McKelvey St. John’s, Newfoundland |
For The plaintiff |