This case concerns a motion for an interlocutory judgment rendered in the scope of an action based on trademark infringement.
In its motion for the interlocutory judgment, the Plaintiff asked the court to order the Defendants (former authorized dealers of the Plaintiff who, after their authorization had been revoked, continued to sell the Plaintiff’s products and to use the Plaintiff’s logos and trademarks in their publicity) to cease advertising themselves as suppliers of the products and to cease selling such products. The Superior Court granted the interlocutory motion for an injunction.(2)
The Defendants had been, between 1998 and 2004, authorized dealers of the Plaintiff with the right to sell, rent and repair the Plaintiff’s products, mainly outdoor power products used in major landscaping and snow removal. All the products displayed the logos and trade-marks (Husqvarna and Jonsered) owned by the Plaintiff’s parent company in Sweden. These logos and trade-marks were all registered in Canada, and only the Plaintiff had the right to use or to authorize their use in Canada. After their authorization had been discontinued and given to another dealer in the area, the Defendants continued to sell products bearing the Husqvarna and Jonsered trademarks and logos, obtaining the products elsewhere, and continued to use the logos in their advertising.
Husqvarna instituted a trade-mark infringement action based on Articles 7(b) and 20(1) of the federal Trade-Marks Act, the relevant parts whereof read:
7. No person shall (a) … (b) direct public attention to his wares, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his wares, services or business and the wares, services or business of another;
20. (1) The right of the owner of a registered trade-mark to its exclusive use shall be deemed to be infringed by a person not entitled to its use under this Act who sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name … In addition, Husqvarna pleaded that the Defendants’ conduct, namely sale of the products with the Plaintiff’s trade-marks without being an authorized dealer constituted passing-off and thus a fault under the Civil Code of Quebec.
In defence, the Defendants – while admitting that they were no longer authorized dealers of the Plaintiff and that the warranty offered on the products sold by them was not the same as the warranty offered by Husqvarna – pleaded that freedom of enterprise gave them the right to sell these products, which they were able to obtain elsewhere.
The Superior Court granted the interlocutory injunction and ordered the Defendants:
- not to sell any new Husqvarna and/or Jonsered products;
- not to sell, to advertise or to represent themselves in any way (including through use of the logos and names that belonged to the Plaintiff) that would lead clients and/or potential clients to believe that the Defendants were authorized retailers and/or dealers of the Plaintiff, and that, as such, could honour the Plaintiff’s warranties; and
- to cease advertising, announcing or representing themselves as authorised retailers and/or dealers in the publications summarily listed in the injunction (which included Yellow Pages, Internet, local newspaper, radio and television and any other written or electronic publication of a similar nature(3))
Quebec case law has set three criteria that must all be present in order for an interlocutory injunction to be granted:
- the appearance of a right;
- a serious and irreparable harm; and
- the balance of inconvenience.
i) appearance of a right
In evaluating the first criterion, Justice Claude Bouchard, J.S.C., recalled the three elements required in a passing-off action, as set out in Ciba-Geigy Canada ltd.. v. Apotex inc. (4):
- the existence of goodwill;
- deception of the public due to a misrepresentation; and
- actual or potential damage to the plaintiff.
Justice Bouchard also cited the following passage from Commodore Business Machine ltd. v. 116772 Canada inc. (5), where Justice Roland Durand, J.S.C., wrote: « The Court also finds that the goodwill generated by Commodore’s marketing practises, advertising and quality of products belongs to it insofar as Canada in general and Quebec in particular are concerned. It is clear that Respondent, not being an authorized dealer of Commodore’s and not being subject to the restrictions contained in its dealership agreement is appropriating for itself this goodwill which is indeed an asset of Commodore. This, in the Court’s opinion, constitutes unfair competition and passing off. To reach this conclusion, it is not necessary to use the common law definition of the term ‘passing off’ nor the reasoning is cases dealing with infringement of trademarks or the distinctiveness of same as the principle is well established in our law. As stated by Mr. Justice Pelletier, in the case of République française c. Hyman Ltd. (6) at page 23: ‘The principles of law in this matter are well-known. It does not concern a trade-mark violation strictly speaking, but the sanction of the principle that if everyone has the right to sell his own merchandise as he chooses, he does not have the right to offer them for sale in a way as to lead the purchasers and the public, in general, to believe that the merchandise that he sells is manufactured and sold legitimately by another.’ [trans.]
In the same case, Mr. Justice Greenshields, as he was then, added at page 25: ‘The action of course must be distinguished from one based on a trade mark. The underlying principle in case of this king is that while every man has a right to sell his own goods, he must not offer them for sale in such a manner as to induce the public buyer to believe that he is buying the goods of another.’
That is course of action is in contravention of article 1053 c.c. (7) was clearly confirmed by our Court of Appeals in the case of Acme Vacuum Cleaner Co. Ltd c. Acme Vacuum Cleaner Co. Ltd.(8)»
In light of the foregoing case law, Justice Bouchard, without going into the merits of the action, wrote: In effect, the defendants, non-authorized dealers of Husqvarna, selling and distributing its products while using its mark and its logo, posting them on their business’ signs, and thereby benefitting from the awareness and the recognized quality of its products to increase their sales. Not being authorized distributors, moreover they cannot offer the same warranty which Husqvarna offers on its products, as well as the after-sale services that it is also in a position to offer.
In so acting, the defendants cause to believe, at first sight, that the merchandise sold is that manufactured by Husqvarna and has all its attributes, which is not the case, though it be only on the issue of warranty offered and of after-sale service.(9) [trans.]
ii) serious and irreparable harm
In evaluating the second criterion, Justice Bouchard mentioned it was necessary to recognize the difficulty in establishing evidence of prejudice suffered by Husqvarna due the Defendants’ sales of the Plaintiff’s products (10), citing a passage from the author Jean-Philippe Mikus, including: …The jurisprudence goes as far as presuming the existence of damages if a satisfactory proof of goodwill and false representation is brought. This naturally is because the damage that is the subject of the passing off action is the damage to the attracting force of the notorious mark of which its owner benefits. (11) [trans.]
In this respect, Justice Bouchard ruled that false representation could result from belief that the Defendants have the owner’s authorization to use the well-known mark. As for evidence of goodwill, the judge stated that it was not required to show a loss resulting from such illegal use, and that an infringement on the distinctive character of the mark leading to erosion and diminishing of its prestige, force and integrity was sufficient.(12) The judge added that the notoriety of Husqvarna products was not in doubt, as the reliability of the product, its qualities and warranties were well-known. Furthermore, the national and regional advertising campaigns in which the authorized dealers participated ensured the visibility of the mark and the implications on the authorized dealers.(13)
iii) balance of inconvenience
Justice Bouchard concluded that this final criterion leaned in favour of the Plaintiff, as the latter had already demonstrated that the other two criteria were fulfilled. The Defendant Dufour having declared that 10 to 15% of his income was attributable to sales, without however establishing how much was from the products with the Husqvarna mark and the greater part thereof coming from repair of equipment, the judge ruled that the harm suffered by the Defendants was of less importance than that susceptible to be suffered by the Husqvarna business.(14)
Andrè Begin, IDI agency and distribution expert for Canada.
1 reported as J.E. 2009-414 and 2009 QCCS 283.
2 The final injunction was granted on May 5, 2009 with the same orders, the Defendants having acquiesced to the judgment.
3 It is pointed out that the judge did not view it necessary, at the interlocutory stage, to rule on the Plaintiff’s pray to prohibit the Defendants from obtaining products with the Husqvarna mark, as the injunction prohibited the Defendants from selling these and from representing themselves as retailers of same.(par. 27)
4  3 S.C.R. 120
5  C.S. 1186
6  31 B.R. 22
7 Note: This reference was to Article 1053 of the former Civil Code of Lower Canada. This article has been replaced by Article 1457 of the Civil Code of Quebec, which came into force in 1994.
8  B.R. 188
9 Husqvarna, pars. 20-21
10 Husqvarna, par. 22
11 Husqvarna, par. 22, citing: Jean-Philippe Mikus, Développements récents en droit de la propriété intellectuelle, La protection des marques de commerce au Canada, Les Éditions Yvon Blais inc., 2004, Cowansville, p. 84, 88.
12 Husqvarna, par. 23.
13 Husqvarna, par. 24.
14 Husqvarna, pars. 25-26.