Venngo Inc. v. Concierge Connection Inc. (Perkopolis, Morgan C. Marlowe and Richard Thomas Joynt)

Venngo Inc. v. Concierge Connection Inc. (Perkopolis, Morgan C. Marlowe and Richard Thomas Joynt)
Court (s) Database
Federal Court Decisions
Date
2015-12-02
Neutral citation
2015 FC 1338
File numbers
T-467-11
Decision Content
Date: 20151203
Docket: T-467-11
Citation: 2015 FC 1338
Ottawa, Ontario, December 3, 2015
PRESENT: The Honourable Mr. Justice Manson
BETWEEN:
VENNGO INC.
Plaintiff
and
CONCIERGE CONNECTION INC. C.O.B. AS PERKOPOLIS, MORGAN C. MARLOWE AND RICHARD THOMAS JOYNT
Defendants
AND BETWEEN:
CONCIERGE CONNECTION INC.
Plaintiff by Counterclaim
and
VENNGO INC.
Defendant by Counterclaim
TABLE OF CONTENTS
I. Background Facts. 3
II. The Parties’ Pleadings. 6
III. The Evidence. 8
A. Venngo’s Witness Evidence. 8
(1) Brent Stucke. 8
(2) Sharon Mitchell (Affidavit Evidence) 13
(3) Elizabeth Kieffer 14
(4) Kevin Hayashi 14
(5) Douglas Garcia. 15
(6) Bradley Moyer 16
(7) Sally Benn. 17
B. Venngo’s Read-Ins from Discovery Pursuant to Rule 288. 18
(1) Discovery of Morgan Marlowe, as CCI’s Corporate Representative, and in her Personal Capacity 18
(2) Discovery of Richard Joynt, in his Personal Capacity. 20
C. Defendants’ Evidence. 20
(1) Defendants’ Read-ins from Discovery Pursuant to Rule 288. 21
IV. Analysis. 21
A. Liability of Morgan Marlowe and Richard Joynt 21
B. Subsection 7(c) of the Trade-marks Act 24
C. Subsection 7(a) of the Trade-marks Act 24
D. Section 22 of the Trade-marks Act – Depreciation of Goodwill 25
E. Subsection 7(b) of the Trade-marks Act – Passing Off. 26
F. Sections 19 and 20 of the Trade-marks Act – Confusion. 28
(1) Section 19. 28
(2) Section 20. 29
(a) Section 6. 30
(i) Degree of resemblance. 34
(ii) Inherent Distinctiveness. 37
(iii) The nature of the wares, services or business. 38
(iv) The length of time the marks have been used. 39
(v) Other Surrounding Circumstances. 39
V. The Defendants’ Counterclaim.. 41
VI. Costs. 41
Annex “A”. 44
JUDGMENT AND REASONS
[1] In this action the Plaintiff, Venngo Inc. [“Venngo”], claims that Concierge Connection Inc. [“CCI”] and its directors, Ms. Morgan Marlowe and Mr. Richard Joynt (collectively “the Defendants”) have infringed its rights in a family of registered Canadian trademarks ending in “PERKS” [the Venngo Trademarks] by using the registered trademark “PERKOPOLIS”, pursuant to sections 19 and 20 of the Trade-marks Act, RSC, 1985, c T-13 [the Act]. Venngo further alleges that the Defendants have made false and misleading statements discrediting Venngo’s business, committed the tort of passing off and depreciated their goodwill, contrary to subsections 7(a), 7(b), 7(c) and 22 of the Act. The relevant provisions of the Act are attached as Annex A hereto.
I. Background Facts [2] Venngo and CCI are “Commercial Program Providers”, a term used to describe their business of offering discount, benefit and incentive programs to Canadian companies and professional organizations [the customers]. The customers of Venngo and CCI sign contracts so they can offer these discounts on various products and services, including entertainment tickets, car rentals, fitness clubs, hotels, spas and more, to their employees as membership or employment benefits above and beyond salary or wages. The employees [“end-users”] access the benefits by registering with Venngo or CCI, either on a website specific to the particular customer (for Venngo) or on the company’s website (for CCI).
[3] Venngo was founded in 2000, and by 2005 it was providing Commercial Program Provider services to various prominent Canadian organizations. By 2007, Venngo had expanded its discount programs to offer a wide range of goods and services categories to its customers. That year Venngo adopted the WORKPERKS, MEMBERPERKS and ADPERKS marks to promote its discount programs, and in 2008 and 2009, Venngo filed applications based on proposed use for PARTNERPERKS, CLIENTPERKS and CUSTOMERPERKS. The following table sets out the filing and registration details for the Venngo Trademarks:
Venngo Marks
Registration Number
Filing date
Declaration of Use
Registration date
WORKPERKS
TMA 747 589
2007-05-04
2009-08-17
2009-09-15
MEMBERPERKS
TMA 791 745
2007-05-04
2011-01-18
2011-02-28
ADPERKS
TMA 739 162
2007-05-04
2009-04-09
2009-04-30
PARTNERPERKS
TMA 747 313
2008-05-07
2009-08-13
2009-09-10
CLIENTPERKS
TMA 768 980
2009-05-29
2010-05-7
2010-06-08
CUSTOMERPERKS
TMA 769 237
2009-05-29
2010-05-7
2010-06-09
[4] The wares and services listed in all of Venngo’s registrations relate to Discount Programs and are essentially the same. Below is the actual description of wares and services for one of the Venngo Trademarks, WORKPERKS:
WARES/MARCHANDISE:
Computer software, namely internet software for portal applications, networking, business to business (B2B) communications, business to consumer (B2C) communications, marketing, product and service distribution
SERVICES:
Providing packaged employee saving and value added programs delivered online and through printed publications; Providing online facilities and printed publications to allow companies to advertise and market products and services; Providing services designing, creating, hosting, maintaining, operating, managing, advertising and marketing savings and value-added programs; Providing software interfaces available over the internet with multiple users access to a wide range of information
[5] CCI was incorporated in 2001 and as of October 2006, it described itself as a “Toronto-based corporate concierge company” that offers an “Employee Discount Ticket and Attraction Program” to its customers. It used the word “perks” to describe its discounts as far back as 2002, as evinced on CCI’s website from that year.
[6] In 2006, 2007, 2009 and 2010, Venngo approached CCI to propose a vendor relationship, which CCI declined. Email exchanges in October 2007, between the parties revealed to CCI the WORKPERKS and ADPERKS marks, the Venngo system for managing Discount Programs, and the Venngo Customer Employee Groups and Association/Member-based Groups and corresponding number of end-users. Venngo claims this information was confidential, which CCI disputes.
[7] As of June and July of 2008, CCI’s promotional materials had expanded to offer entertainment tickets to theme parks, movie theatres, sporting events, zoos and hotel bookings.
[8] On November 28, 2008, CCI applied for registration of the trademark PERKOPOLIS on the basis of proposed use in association with “Entertainment ticket sales and Hotel bookings services”, which was registered on March 1, 2011, under TMA 792 711. At the time of filing, Venngo’s applications for WORKPERKS, MEMBERPERKS, ADPERKS and PARTNERPERKS had been filed at the Canadian Trademarks Office.
[9] In February of 2009, CCI began to use the PERKOPOLIS mark and trade name to promote its business, it launched its website, www.perkopolis.com, and by February 2011, Perkopolis had extended its services to 16 categories, providing a greater variety of discounts beyond the entertainment and hotel business.
II. The Parties’ Pleadings [10] Venngo alleges that as early as January 2010, it began to receive reports of actual confusion from its customers and end-users, which have continued to the present.
[11] Venngo commenced two other actions in the Ontario Superior Court of Justice in June and December of 2013, which remain at the pleadings stage, alleging unauthorized disclosure of confidential information to CCI.
[12] Venngo also asserts that Ms. Marlowe and Mr. Joynt were and are the controlling minds of CCI, who commanded its day to day activities, and knowingly directed CCI to adopt a confusingly similar trademark, trade name and domain name (PERKOPOLIS, Perkopolis and perkopolis.com, respectively) and to offer services nearly identical to those offered by Venngo. Ms. Marlowe and Mr. Joynt thereby wilfully and knowingly pursued a course of conduct likely to constitute trademark infringement and passing off, or reflected an indifference to the risk of such infringement and passing off.
[13] With respect to the subsection 7(a) claim, Venngo alleges the Defendants made false and misleading statements to third parties intending to discredit Venngo’s services, by stating that Venngo lacked the necessary infrastructure to provide customer support and or have adequate privacy and security for personal information of those third parties.
[14] Finally, Venngo asserts that the CCI trademark registration for PERKOPOLIS, registration TMA 792,711, has always been invalid, being contrary to sections 18 and 57 of the Act for lacking distinctiveness (subsection 18(1)(a)) given that it was at all material times, before and after registration, confusingly similar to one or more of Venngo’s family of trademarks.
[15] The Defendants state that CCI has operated discount services since 1999. It adopted the Perkopolis trade name in early 2008, and registered the domain name, perkopolis.com, on April 25, 2008. It registered the PERKOPOLIS trademark on March 11, 2011, based on a declaration of use filed that date.
[16] The Defendants further assert that no information provided by Venngo to the Defendants, as a result of unsolicited approaches by Venngo, was confidential.
[17] Regarding Venngo’s subsection 7(a) claim, the Defendants argue it is unconnected to any trademark alleged, and therefore beyond the jurisdiction of the Federal Court.
[18] They deny any likelihood of confusion given that:
“perk” is generic; “perk” is commonly used by third parties and in third party trademarks; the degree of resemblance between the Venngo trademarks and PERKOPOLIS is low in appearance, sound or ideas suggested; the Perkopolis services and business are significantly different from Venngo’s services and business; the nature of trade precludes any likelihood of confusion, given that clients and customers are sophisticated, and that well-educated executives are the relevant consumers of the services offered by both the Defendants in association with the PERKOPOLIS trademark and the Plaintiff in association with the Venngo Trademarks.
[19] Moreover, the Defendants made numerous allegations that Venngo’s registrations are invalid. At the hearing, they limited their validity attack on the Venngo Trademarks to subsections 18(1)(a) and 12(1)(d) of the Act, specifically, that the trademarks were not registrable at the date of registration on the basis they were confusing with previously registered trademarks.
[20] The Defendants also argue that Venngo has failed to prove any valid cause of action under subsections 7(a), 7(b), 7(c) and 22 of the Act, which require proof of damages. Venngo has refused to produce information or documents that support any damages arising from the impugned activities of the Defendants, and thus cannot succeed with respect to these claims.
[21] At the hearing, the parties jointly requested that a bifurcation order be issued with respect to the quantum of damages, to be determined once liability is decided, if necessary. The relief should have been sought well before trial and, in fact, before the parties embarked on discoveries. Notwithstanding, the belated request was granted in light of the parties’ consent.
III. The Evidence A. Venngo’s Witness Evidence (1) Brent Stucke [22] Brent Stucke is chairman and founder of Venngo, which he describes as a fully out-sourced commercial program that provides discounts to over 1000 vender services to end-users, who are the employees and members of Venngo’s customers, consisting of corporations and professional associations.
[23] Venngo also has proprietary software solutions, such as ADPERKS and WORKPERKS, that they licence to their customers. ADPERKS is an internet-based program provider that offers a low-cost way for vendors to market to special end-users. It started in January 2000, and in 2005, Venngo developed novel software for new discount programs, which involved the adoption of the trademarks WORKPERKS, MEMBERPERKS and ADPERKS.
[24] In 2007, Venngo was named 27th out of the fastest 50 growing tech companies (Deloitte award), and 208th out of the top 500 fastest growing tech companies in North America, in terms of revenues and profits growing.
[25] WORKPERKS provides loyalty discount programs for customers, under which management and maintenance are fully outsourced. The WORKPERKS landing page from November 2007, provides the platform of connectivity between the vendors and suppliers of products and services and end-users.
[26] In August and September of 2007, Mr. Stucke forged a business relationship with Microsoft, which resulted in Microsoft WORKPERKS, a webpage for end-users that provides access to different categories of suppliers. In 2007, Venngo’s other clients included UPS and Hewlett-Packard, among many others.
[27] Venngo used the ADPERKS and MEMBERPERKS marks in 2007 in advertisements to potential customers, specifically targeting Human Resources (HR) executives and decision-makers of program benefits for companies and associations. Between 2007 and 2015, emails to end-users grew from 100,000 to 1,000,000 per month. Venngo advertised using their trademarks in booths at various trade shows, including the Human Resources Professionals of Canada Tradeshow. Attending trade shows continues to be a main marketing avenue for Venngo, who annually attends numerous trade shows in major cities across Canada.
[28] Mr. Stucke testified Venngo was the first to market fully out-sourced solutions of its kind in 2007, and he was not aware of any others at the time. He asserts that Venngo is part of a niche market, and today Venngo and CCI are the only suppliers of outsourced commercial programs of their kind. Mr. Stucke also opined that from 2005 to 2007, there was little use of the word “perk” in his business, and he qualifies that Venngo only objects to the use of “perk” or “perks” in their niche business market.
[29] The marks CLIENTPERKS and PROGRAMPERKS have not been in use since 2009. The claims in respect of these trademarks are therefore abandoned in this action.
[30] According to Mr. Stucke, WORKPERKS was marketed to all customers and their end-users on-line, in-house, at charity events, trade shows and through search engine optimization. Customers include, for example, national banks (CIBC, Scotiabank, HSBS), four large CPA groups, Telus, Purolator, FedEx, and the Ontario College of Teachers. MEMBERPERKS is similar but used for associations. ADPERKS clients include Apple, Toshiba, GM, Lenovo, Jack Astors, Goodlife, ClubLinks, Le Chateau, La Vie en Rose and Tommy Hilfiger, as well as many others. Apple’s growth had been very good from 2008 to 2011, but has declined thereafter, which Mr. Stucke attributes to confusion caused by the Defendants’ use of the PERKOPOLIS trademark, the Perkopolis trade name and the perkopolis.com domain name in the marketplace.
[31] Venngo first became aware of Perkopolis in 2009, at which time it was a hotel and entertainment broker under CCI’s name. Perkopolis provides discounts to customers and end-users from 265 vendors, 200 of which now fall outside the realm of hotels and entertainment, thus, making it a Commercial Program Provider in direct competition with Venngo.
[32] In the spring of 2006, Mr. Stucke reached out to Ms. Marlowe (at CCI) in an attempt to sell Venngo marketing. He again contacted her in 2007, 2009 and 2010. He states he believed their conversations were confidential, and although he does not recall details of the discussions, he felt he disclosed confidential information regarding Venngo’s business model and strategy to Ms. Marlowe in 2006 and 2007. For instance, a PowerPoint presentation he reviewed with her said “confidential” on each page. No other documents were shown or sent to her.
[33] In March 2011, Mr. Stucke testified Venngo became aware of and concerned with the expanded services of Perkopolis. Between April 2009, and February 2011, CCI began to use the “PERKOPOLIS” trademark and Perkopolis trade name and expanded its services to overlap with Venngo services. Mr. Stucke states he realized Venngo’s rights were being breached when he became aware of instances of confusion between the companies. The first instance of confusion between WORKPERKS and PERKOPOLIS came from HR professionals at Magna International.
[34] Unlike Venngo, CCI does not indicate it is the source company in its advertising of Perkopolis services to customers. Mr. Stucke stated Perkopolis has benefited from the use of the PERKOPOLIS mark in Venngo’s niche market, causing them damage.
[35] On cross-examination, Mr. Stucke agreed that Venngo typically aims to market to the most senior person in HR departments of a targeted company or association. This takes significant time and due diligence, and generally results in a longer sale cycle (1 year or more), although some sales cycles are significantly shorter.
[36] Various examples of Venngo’s marketing materials for ADPERKS, MEMBERPERKS and WORKPERKS to customers such as Telus, Ernst & Young, Scotiabank, Gowlings, Zurich, CIBC, and others, include the phrase “we call them perks” to describe their deals and discounts. Further, end-users may opt-in to monthly updates, which list the “perks” offered. Mr. Stucke acknowledged that Venngo’s advertising materials show its use of the term “perk”, including “over the past few weeks we’ve added lots of new perks…”, “want to see more perks – visit the site…”, and “the number of perks is constantly growing”. Moreover, Venngo’s template for customers contained phrases that show the generic use of “perk” as a noun, meaning a benefit offered to an employee, including “setting up your perk – in 10 easy steps”, “Provide us a brief description of your company and your perk”, “perk description”, “perk details”, and other uses of perk as a noun.
[37] The cross-examination also revealed that when Mr. Stucke met with Ms. Marlowe in 2006, at no time did he mention the Venngo trademarks in issue. Further, emails from July 2006, and October 2007, from Mr. Stucke to Ms. Marlowe evinces there was no signed confidentiality agreement, no letter or email to confirm any discussions were confidential, and Mr. Stucke does not recall leaving the alleged confidential PowerPoint with Ms. Marlowe.
[38] In January of 2011, Venngo tried to gain TD Bank as a client, with whom they had been corresponding for a number of months. TD Bank chose Perkopolis, which Mr. Stucke admits was on the basis that Venngo could not accept certain terms TD requested. Venngo also lost Canada Post, and Microsoft and RBC are no longer customers, as they now use Perkopolis.
[39] Venngo claims the confusion stemming from CCI’s adoption of the trademark PERKOPOLIS and the trade name Perkopolis had what amounts to a “springboard” effect, damaging Venngo’s business and client base.
(2) Sharon Mitchell (Affidavit Evidence) [40] The parties agreed at the outset of the hearing that the affidavit of Sharon Mitchell, sworn on August 1, 2012, and her cross-examination submitted at the summary judgment application heard by Justice de Montigny in this matter be admitted as evidence for use at trial, which I have agreed to admit.
[41] Sharon Mitchell is the Chief Operating Officer of Gowling Lafleur Henderson LLP’s Toronto office. In January 2011, Ms. Mitchell noticed an email from Perkopolis circulating among Gowlings staff, offering employees promotions for tickets to events. At that time Gowlings had already entered into a relationship with Venngo to supply WORKPERKS to Gowlings staff.
[42] Ms. Mitchell spoke with the General Manager of Gowlings to ask if Perkopolis was part of WORKPERKS, given the similarity between the two words, and was advised they were not connected. On cross-examination, Ms. Mitchell admitted she did not look at any other employee benefit programs offering similar products.
[43] Ms. Mitchell also acknowledged she had heard of the term “perk” used by HR professionals in connection with employee benefit programs, and agreed this has been the case for many years. She does not think PERKOPOLIS and WORKPERKS look the same, nor that they are similar in sound, but she “see[s] them as similar”.
(3) Elizabeth Kieffer [44] Ms. Kieffer is an independent witness who worked with TD Canada Trust. In July 2014, she phoned Venngo to open a Perkopolis account, thinking the Perkopolis and WORKPERKS programs emanated from the same company. She stated on cross-examination, she mistakenly “said the wrong word”.
(4) Kevin Hayashi [45] Mr. Hayashi was employed as food and beverage manager and then manager of sales and marketing at ClubLinks from 2011 to January 2015. In his position as sales manager, he managed sponsorships and advertising, and in this capacity became aware of ADPERKS.
[46] ClubLinks used Venngo’s services – MEMBERPERKS, ADPERKS and WORKPERKS. Mr. Hayashi was aware of Perkopolis, but admitted on cross-examination he was not responsible for ClubLinks participation in the Venngo program.
[47] In late 2011, in a meeting with Brad Moyer from Venngo, Mr. Hayashi told Mr. Moyer that ClubLinks had the Venngo PERKOPOLIS program, to which Mr. Moyer informed him was not a Venngo program and was not the same as Venngo’s programs.
[48] On cross-examination, Mr. Hayashi testified he had not considered the idea suggested by the above-mentioned marks previously, however, he thinks PERKOPOLIS sounds and looks like ADPERKS, WORKPERKS and MEMBERPERKS, due to the common use of “PERKS”. He further stated he would consider other third party marks, such as CAMPUSPERKS and QUESTPERKS, used in association with discount programs, as part of Venngo, given the use of the word “perks”.
(5) Douglas Garcia [49] Mr. Garcia is the Vice President of business development at Samba Rewards, an incentive program for sales people. As Vice-President, he deals with HR professionals.
[50] Mr. Garcia has been aware of MEMBERPERKS, WORKPERKS, CUSTOMERPERKS and Venngo since 2008, through industry trade shows, and as well through google searches for perks and incentive programs.
[51] He first became aware of PERKOPOLIS from McDonald’s Canada, who was looking for an employee discount program. He was also aware of CCI, although he did not know that PERKOPOLIS and CCI were connected. Mr. Garcia thought PERKOPOLIS was another Venngo program until June 2012, when Mr. Stucke informed him it was not.
[52] Mr. Garcia testified during cross-examination that the ideas suggested by the marks are as follows; WORKPERKS suggests a program providing employee perks, MEMBERPERKS suggests perks offered to members, and CUSTOMERPERKS suggests loyalty programs. PERKOPOLIS suggests perks provided to “big operations”, due to the use of “opolis”. He believed the above marks were connected due to the common characteristic between them, “PERK” or “PERKS”.
(6) Bradley Moyer [53] Mr. Moyer started out at Venngo as account manager in 2009, and is currently Director of Sales. He sells all four Venngo products nationally to HR professionals and trained sales personnel.
[54] Since 2010, Venngo has participated in three to nine HR trade shows per year, attended by HR VP’s, managers, and directors from various companies and provincial associations. At these shows, Venngo’s commercial WORKPERKS program is the major focus.
[55] Mr. Moyer first heard of Perkopolis at a trade show in 2010, and was unaware it was owned by CCI. Mr. Moyer’s evidence of confusion at these trade shows is hearsay, which I have not admitted on the basis it is neither reliable nor necessary.
[56] During cross-examination, Mr. Moyer stated that Trillium Hospital Group thought Perkopolis was WORKPERKS. In fact, Venngo lost this client to Perkopolis based on cost; WORKPERKS was more expensive, as Perkopolis was offered to Trillium for free.
(7) Sally Benn [57] Ms. Benn has been the Director of Key Accounts at Venngo since November 2007. In her position, she speaks to employees and conducts lunch-and-learns to demonstrate how to use Venngo’s sites and mobile apps and provides details of merchant programs.
[58] Ms. Benn attends two to three trade shows across Canada per year, where she has been asked if Venngo owns or is associated with PERKOPOLIS. When people inquire about PERKOPOLIS, Ms. Benn explains they are not the same company.
[59] The number of attendees at the trade shows varies; approximately 3000 HR professionals go to the Human Resources Professional Association tradeshow, whereas other shows generally reach around 300 attendees. At the shows, Venngo has booths to advertise their benefits, apps, out-sourced solutions and programs. They give out “swag”, written brochures and flyers upon which the Venngo trademarks are identified, and are co-branded with the Venngo trade name.
[60] In Ms. Benn’s opinion, Perkopolis is Venngo’s only competitor that offers a similar program in Canada. Ms. Benn agreed on cross-examination that in order for employees to access the Venngo website to use Venngo services associated with the Venngo trademarks, they had to use a unique URL that needs authentication (for example, CIBC.Venngo.com, or Scotiabank.Venngo.com).
B. Venngo’s Read-Ins from Discovery Pursuant to Rule 288 (1) Discovery of Morgan Marlowe, as CCI’s Corporate Representative, and in her Personal Capacity [61] The following is a summary of salient issues arising from the discovery read-ins of the Defendants’ representative, Ms. Marlowe.
[62] Ms. Marlowe is President and Founder of CCI and its corporate representative in this proceeding. She confirms she is the sole officer, director and shareholder of CCI and is also its owner, president and secretary. She has been with the company since its inception in 1999, which began as a corporate concierge service. Ms. Marlowe makes all operational and management decisions. CCI has only three employees.
[63] Ms. Marlowe first visited Venngo’s website in 2007 and has visited the site 6 times in total between then and the date of discovery.
[64] Reid Manchester, a CCI employee, came up with the trademark PERKOPOLIS - which the company settled upon after considering various suggestions. Ms. Marlowe registered Perkopolis as a business name in early 2008 and Perkopolis’ website, developed by Softfocus, went live in February of 2009, offering discount tickets and magazines.
[65] Ms. Marlowe filed the trademark application for PERKOPOLIS, with no prior registrability search, for ticket sales and hotel booking services. As of the discovery, Perkopolis offered other services.
[66] Venngo approached CCI to propose offering CCI services on Venngo’s website. Ms. Marlowe had one face to face meeting with Mr. Stucke in 2005 or 2006, and communicated with him verbally thereafter. In July 2010, Mr. Stucke offered to partner with Ms. Marlowe, which she declined. They have had no contact since then.
[67] Ms. Marlowe is not aware of searches or results of searches for trademarks using “PERKS”, or how they are conducted, and she was not aware of pending applications for MEMBERPERKS or WORKPERKS at the time she filed for PERKOPOLIS. The first time she heard of the WORKPERKS trademark was at her first meeting with Mr. Stucke and she later became aware of MEMBERPERKS.
[68] Ms. Marlowe opined that CCI’s concierge service is a “perk”. The business has expanded since 2005 due to requests from customers and clients to go beyond an employee discount benefit program.
[69] Perkopolis advertises to customers, now constituting of around 300 companies, using emails, phone-calls, flyers, posters, a launch page, as well as through HR publications. Perkopolis makes revenue by selling products and services on their website to clients, and as well through some commissions. They are not paid by their vendors.
(2) Discovery of Richard Joynt, in his Personal Capacity [70] Mr. Joynt is the business development and account manager of CCI, which he joined in May 2009. He is married to Ms. Marlowe. He is solely responsible for sales and does not make decisions for the company. He has no responsibility for Perkopolis’ day-to-day operations – those decisions are Ms. Marlowe’s.
[71] At discovery, Mr. Joynt stated upon review of Exhibit 45 (the Venngo Business Plan he had seen portions of previously) he had not noticed it said “confidential” on every page.
C. Defendants’ Evidence [72] The Defendants did not call any witnesses at trial, and rely on the parties’ discovery read-ins, the facts as evinced by Venngo’s witnesses, certified copies of the prosecution file histories of registered trademarks asserted by Venngo, and the PERKOPOLIS registration and dictionary definitions of the words “perks” and “perquisites”.
[73] Venngo’s applications for WORKPERKS, MEMBERPERKS, ADPERKS and PARTNERPERKS were all filed before CCI filed PERKOPOLIS, yet, the Trade-Marks Office did not cite any of Venngo’s prior filed applications against the PERKOPOLIS application. As well, the PERKOPOLIS application was filed before Venngo filed applications for CUSTOMERPERKS and CLIENTPERKS. Again, the Trade-Marks Office did not cite PERKOPOLIS against Venngo’s later filed applications.
[74] The certified copy of the file history of PERKOPOLIS, CUSTOMERPERKS and CLIENTPERKS evinces that no third party trademarks were cited against any of these applications for registrations.
(1) Defendants’ Read-ins from Discovery Pursuant to Rule 288 [75] At discovery, Venngo’s representative, Mr. Weissman, indicated, despite the Defendants’ request for financial information to support the claim for damages under subsections 7(b) and 7(c) of the Act, that no financial information would be provided.
IV. Analysis A. Liability of Morgan Marlowe and Richard Joynt [76] Venngo withdrew its allegations of personal liability against Mr. Joynt at the outset of the hearing, and the action against him is dismissed.
[77] With respect to Ms. Marlowe, the test for finding an officer or director of a corporation
personally liable is set out in Tommy Hilfiger Licensing Inc v Produits de Qualité IMD Inc, 2005 FC 10 at paras 140-142:
140 The Ontario Court of Appeal held in Normart Management Ltd. v. West Hill Redevelopment Co. (1998), 37 O.R. (3d) 97, page 102:
It is well established that the directing minds of corporations cannot be held civilly liable for the actions of the corporations they control and direct unless there is 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: see Scotia McLeod Inc. v. Peoples Jewellers Ltd. (1995), 26 O.R. (3d) 481 at p. 491, 129 D.L.R. (4th) 711 (C.A.).
141 Therefore, the mere fact of exercising control in a company is not sufficient to establish personal liability. What kind of conduct can trigger personal liability? Le Dain J.A. offers his views in Mentmore Manufacturing Co., Ltd. v. National Merchandising Manufacturing Co. Inc. (1978), 89 D.L.R. (3d) 195, (1978), 22 N.R. 161 (F.C.A.):
What, however, is the kind of participation in the acts of the company that should give rise to personal liability? It is an elusive question. It would appear to be that degree and kind of personal involvement by which the director or officer makes the tortious act his own. It is obviously a question of fact to be decided on the circumstances of each case.[...]
142 In my opinion, there must be circumstances from which it is reasonable to conclude that the purpose of the director or officer of a company is to deliberately, willfully and knowingly pursue a course of conduct that will incite infringement or an indifference to the risk of infringement. The precise formulation of the appropriate test is obviously a difficult one. Room must be left for a broad appreciation of the circumstances of each case to determine, if there is personal liability (Mentmore, supra, at pages 172-174).
[78] As I stated in Red Label Vacations Inc (cob RedTag.ca) v 411 Travel Buys Ltd (cob 411TravelBuys.ca), 2015 FC 19 at para 126:
In cases where personal liability is found, there has been a knowing, deliberate, wilful quality to the participation of the corporate officer or director. As well, small or closely held corporations are not to be treated any differently:
31 This principle applies not just to large corporations, but to small, closely held companies as well. As the Federal Court of Appeal noted in Mentmore, at para. 24, there is no reason why small, one or two-person companies should not have the benefit of the same approach to personal liability as large corporations, 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.
32 That is, the mere fact that individual defendants may be sole shareholders and directors of a company is not, by itself, enough to support an inference that the company was their agent or instrument in the commission of acts of infringement, or that they authorized such acts, so as to make themselves personally liable: Mentmore, at para. 24.
33 The necessary result of this is that not only will the particular direction or authorization required for personal liability not be inferred merely from the fact that a company is closely controlled: it will also not be inferred from the general direction which those in such control must necessarily impart to its affairs: Mentmore, at para. 24.
34 The Federal Court of Appeal concluded in Mentmore that to attract personal liability on the part of a corporate director or officer:
[T]here must be circumstances from which it is reasonable to conclude that the purpose of the director or officer was not the direction of the manufacturing and selling activity of the company in the ordinary course of his relationship to it but the deliberate, willful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it: at para. 28.
Petrillo v Allmax Nutrition Inc, 2006 FC 1199 at paras 31-34.
[79] Likewise, in this case, I find no evidence to suggest that Ms. Marlowe acted in any way outside her normal course of duties as the sole officer and director of CCI, and therefore she is not personally liable for the impugned activities of the corporate defendant. The expansion of CCI’s services beyond those covered in the PERKOPOLIS trademark registration over the course of a number of years is a reflection of customer and client requests and normal business practice. The facts surrounding the adoption of the PERKOPOLIS trademark by the Defendants also do not suggest any bad faith. The action against Ms. Marlowe is accordingly dismissed.
B. Subsection 7(c) of the Trade-marks Act [80] Venngo also abandoned its claim under subsection 7(c) of the Act at the hearing. There was no substitution of the services of the Defendants as and for those ordered or requested from the Plaintiff.
C. Subsection 7(a) of the Trade-marks Act [81] The essential elements of a subsection 7(a) action are:
a) a false or misleading statement;
b) tending to discredit the business, wares or services of a competitor; and
c) resulting damage.
Jag Flocomponents NA v Archmetal Industries Corp, 2010 FC 627 at para 114.
[82] Venngo alleges the Defendants have disseminated false and misleading statements regarding Venngo’s business and services tending to discredit Venngo, contrary to subsection 7(a) of the Act. None of the evidence before me supports this claim – while alleged, the evidence does not show statements made by CCI with respect to deficiencies in Venngo’s infrastructure to provide customer support or concerning insufficient privacy and security of personal information.
[83] Further, there is no evidence of any connection of misleading or false statements made by the Defendants to potential or actual Venngo customers or clients in relation to the parties’ trademarks in issue. Unless the alleged false and misleading statements are made in association with otherwise valid federal areas of competence – here, the trademarks in issue – the subsection 7(a) claim must fail. Moreover, no damage has been proven in respect of this cause of action.
[84] This cause of action is accordingly dismissed.
D. Section 22 of the Trade-marks Act – Depreciation of Goodwill [85] The Supreme Court of Canada has set out the requirements for a successful cause of action under section 22 of the Act:
46 Section 22 of our Act has received surprisingly little judicial attention in the more than half century since its enactment. It seems that where marks are used in a confusing manner the preferred remedy is under s. 20. Equally, where there is no confusion, claimants may have felt it difficult to establish the likelihood that depreciation of the value of the goodwill would occur. Be that as it may, the two statutory causes of action are conceptually quite different. Section 22 has four elements. Firstly, that a claimant's registered trade-mark was used by the defendant in connection with wares or services - whether or not such wares and services are competitive with those of the claimant. Secondly, that the claimant's registered trade-mark is sufficiently well known to have significant goodwill attached to it. Section 22 does not require the mark to be well known or famous (in contrast to the analogous European and U.S. laws), but a defendant cannot depreciate the value of the goodwill that does not exist. Thirdly, the claimant's mark was used in a manner likely to have an effect on that goodwill (i.e. linkage) and fourthly that the likely effect would be to depreciate the value of its goodwill (i.e. damage). I will address each element in turn.
Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23.
[86] “Use” under section 22 requires use of a plaintiff’s trademark, as registered. Venngo acknowledges that the only alleged “use” by the Defendants of any of the Venngo trademarks is the use of “Member Perks” on the Perkopolis website, as represented in Exhibits P16 and P17. That use is not use as a trademark for the purpose of distinguishing CCI’s wares or services from others, and cannot constitute a basis for a valid section 22 claim (MC Imports Ltd v Afod Ltd, 2014 FC 1161 at para 44).
[87] This cause of action is also dismissed.
E. Subsection 7(b) of the Trade-marks Act – Passing Off [88] Subsection 7(b) provides that:
7. No person shall
(b) direct public attention to his goods, 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 goods, services or business and the goods, services or business of another;
[89] As stated by the Supreme Court of Canada in Ciba-Geigy Canada Ltd v Apotex Inc, [1992] 3 SCR 120 at para 33:
33 The three necessary components of a Passing off action are thus: the existence of goodwill, deception of the public due to a misrepresentation and actual or potential damage to the plaintiff.
See also Kirkbi AG v Ritvik Holdings Inc, 2005 SCC 65 at paras 65, 68.
[90] I find that based on the evidence before me, including the advertising and use of Venngo’s trademarks throughout Canada over the past five or six years, Venngo has established goodwill in the WORKPERKS, ADPERKS, MEMBERPERKS and CUSTOMERPERKS trademarks.
[91] Venngo argues that notwithstanding its refusal to provide any financial information on discovery relating to damage caused by the Defendants’ alleged passing off under subsection 7(b) of the Act, nevertheless the Court can find damage has been shown by virtue of:
loss of control over use of Venngo’s goodwill in its trademarks by virtue of the Defendants’ use of the PERKOPOLIS trademark, the Perkopolis trade name and the perkopolis.com domain name, leading to inevitable confusion; and the intentional extension of the services offered by the Defendants’ beyond entertainment ticket sales and hotel booking services to services overlapping with Ven