Energizer Brands, LLC v. Gillette Company

Energizer Brands, LLC v. Gillette Company
Court (s) Database
Federal Court Decisions
Date
2023-07-06
Neutral citation
2023 FC 804
File numbers
T-1591-15
Decision Content
Date: 20230706
Docket: T-1591-15
Citation: 2023 FC 804
Ottawa, Ontario, July 6, 2023
PRESENT: The Honourable Justice Fuhrer
BETWEEN:
ENERGIZER BRANDS, LLC AND ENERGIZER CANADA INC.
Plaintiffs
and
THE GILLETTE COMPANY, DURACELL CANADA, INC., DURACELL U.S. OPERATIONS, INC., AND PROCTER & GAMBLE INC.
Defendants
JUDGMENT AND REASONS
(Public Version with Redactions of Confidential Version Issued June 7, 2023)
Table of Contents Page
I. Overview 3
II. Factual Background 4
III. Parties’ Expert Witnesses 12
(1) Energizer’s Experts 12
(a) Dr. Joanne McNeish 12
(b) Dr. William A. Adams 12
(c) A. Scott Davidson 13
(2) Duracell’s Experts 13
(a) Dr. Ceren Kolsarici 13
(b) Dr. Jay Whitacre 14
(c) Andrew C. Harington 14
IV. Parties’ Fact Witnesses 15
(1) Energizer’s Fact Witnesses 15
(2) Duracell’s Fact Witnesses 16
V. Procedural History, including Duracell’s Motion for Summary Judgment 18
VI. Trial Issues 21
VII. Analysis 22
Preliminary Issue: Energizer’s Objections to Expert Evidence 22
(1) Dr. Kolsarici 22
(2) Dr. Whitacre 27
(3) Andrew Harington 29
A. Depreciation of Goodwill? 31
(1) Legal Principles 31
(2) Marketing Concepts 35
(3) Analysis 45
(a) ENERGIZER and ENERGIZER MAX 45
(b) “the bunny brand” 51
(c) “the next leading competitive brand” 55
B. False or Misleading Statements or Descriptions? 58
(1) Subsection 7(a) of TMA - false or misleading statement 59
(2) Subsection 7(d) of TMA - false description in material respect 59
(3) Subsection 52(1) of Competition Act - false or misleading in material respect 60
(4) Analysis 65
(a) Energizer HA Sticker 65
(b) Bunny Brand HA Sticker, Energizer MAX AA Sticker, and Next Leading Competitive Brand AA Sticker 71
C. Activities Permitted by Agreement? 81
D. Remedies? 84
VIII. Conclusion 95
IX. Confidentiality 96
X. Costs 96
Annex “A” – Applicable Legislative Provisions 99
Annex “B” – Summary of Dr. Whitacre’s Analysis of Comparative AA Testing – Duracell Tests* 104
I. Overview
[1] This is a case about comparative advertising. In determining a case like this, the Court often is tasked with considering whether the challenged activity depreciates goodwill and unfairly trades on a claimant’s reputation through a competitor’s false or misleading statements about the claimant or their products, or whether the activity is permissible competition that does not violate the claimant’s intellectual property rights.
[2] I have considered carefully the documentary evidence produced by the parties, the testimony of their witnesses, and their submissions. As noted by the Defendants’ counsel during closing submissions, “Nobody’s been shy to present anything to this Court.”
[3] Having worked my way through the sizable record before the Court, I find that the Defendants’ use of the Plaintiffs’ registered trademarks ENERGIZER and ENERGIZER MAX in comparative advertising on packaging labels or stickers for the very products listed in the registrations contravenes section 22 of the Trademarks Act. I therefore allow the action, in part, on the terms described below.
[4] Otherwise, I determine that in the circumstances underlying this dispute, the Defendants’ other comparative ads are not likely to depreciate goodwill, nor do any of the ads in issue make false or misleading statements contrary to the Trademarks Act and the Competition Act. I thus dismiss the remainder of the action.
II. Factual Background [5] The Plaintiffs [Energizer] and Defendants [Duracell] represent the leading battery brands in Canada and are each other’s biggest competitors. Together, they supply more than two-thirds of the household consumer battery market in Canada. Duracell has the largest market share, while Energizer has the next largest market share.
[6] Energizer is the owner of the following registered Canadian trademarks:
Trademark
Registration
Number and Date
Goods
ENERGIZER
TMA157162 June 7, 1968
Electric dry cell batteries for use in electronic, hearing, lighting and horological devices for operation of small electric motors
ENERGIZER
TMA740338 May 19, 2009
General purpose batteries
ENERGIZER MAX
TMA580557 May 2, 2003
Batteries
(RABBIT & Design)
TMA399312 June 19, 1992
Batteries
(ENERGIZER BUNNY & Design)
TMA943350 July 14, 2016
General purpose batteries; general purpose battery chargers
[Energizer Trademarks]
[7] The Energizer Bunny is an iconic “spokes‑character.” It is a well‑known, if not famous, trademark.
[8] Energizer Brands, LLC and, previously, Eveready Battery Company, Inc., licensed Energizer Canada Inc. to use the Energizer Trademarks in Canada, including from 2014 to 2017.
[9] Duracell is the owner of the registered Canadian trademark DURACELL, registration number TMA153333 dated September 22, 1967, for electric batteries and fuel cells.
[10] Between 2010 and the present, Energizer and Duracell, including their respective predecessors, have supplied AA batteries and hearing aid [HA] batteries in sizes 10, 13 and 312, to retailers in Canada such as Walmart, Costco and Shoppers Drug Mart.
[11] Energizer complains about the following statements the Defendants have displayed on stickers affixed to packaging for certain DURACELL batteries sold in Canada [Sticker Campaign]; representative examples of the stickers also are reproduced below, along with representative examples of the packaging on which the stickers were used:
(a) 15% LONGER LASTING vs. Energizer on size 10, 13, 312.
15% PLUS DURABLES vs les piles Energizer de format 10, 13 et 312.
[Energizer HA Sticker]
(b) Up To 20% LONGER LASTING vs. the bunny brand on sizes 10, 13 & 312.
Durent jusqu’à 20% PLUS LONGTEMPS vs les piles 10, 13 et 312 de la marque du lapin.
[Bunny Brand HA Sticker]
(c) UP TO 15% LONGER LASTING vs. ENERGIZER MAX*
*AA size. Results vary by device and usage patterns.
[Energizer MAX AA Sticker]
(d) up to 15% longer lasting vs. the next leading competitive brand*
*Next leading alkaline based on Nielsen sales data. AA size. Results vary by device and usage patterns.
durent jusqu’à 15% plus longtemps que les piles de l’autre marque concurrente la plus populaire*
*L’autre pile alcaline AA la plus populaire selon les données sur les ventes de Nielsen. Les résultats varient selon le type d’appareil et la fréquence d’utilisation.
[Next Leading Competitive Brand AA Sticker]
[collectively, At Issue Stickers]
[12] The following is a photo of a representative in-store display of batteries, including DURACELL batteries and ENERGIZER batteries:
[13] The top row of batteries in the above photo appears to show the Bunny Brand HA Sticker on the third DURACELL package from the left.
[14] In some stores, there are separate displays for ENERGIZER batteries and for DURACELL batteries. The following are photos of these kinds of displays:
[15] Further, some stores sell only DURACELL batteries, while others sell only ENERGIZER batteries.
[16] Duracell admits that they have sold DURACELL batteries in Canada with packaging bearing labels or stickers that contain the words “the bunny brand” or “the next leading competitive brand” alongside other text. None of Duracell’s packaging, stickers or point-of-sale displays bears both phrases “the bunny brand” and “the next leading competitive brand” (or their French equivalents).
[17] The evidence points to Duracell having displayed the At Issue Stickers on packaging for AA alkaline batteries, containing 6, 8, 10, 16, 20 or 24 batteries, and for HA batteries in sizes 10, 13 or 312, containing 8, 12 or 24 batteries [collectively, At Issue AA Batteries, At Issue HA Batteries, At Issue Batteries or At Issue Packaging, as the case may be], during the approximate period August 2014 to August 2017, with different start and end dates depending on the sticker.
III. Parties’ Expert Witnesses [18] The parties adduced expert evidence, in the form of reports and testimony, in accordance with Rules 52.1, 52.2, and 52.4 of the Federal Courts Rules, SOR/98-106 [FCR]. The expertise for which they were qualified at trial is summarized briefly below.
[19] See Annex “A” to these Reasons for applicable legislative provisions.
(1) Energizer’s Experts
[20] The Plaintiffs rely on the evidence of the following experts: (a) Dr. Joanne E. McNeish; (b) Dr. William A. Adams; and (c) A. Scott Davidson, including Mr. Davidson’s reply expert evidence.
(a) Dr. Joanne McNeish
[21] Dr. McNeish is an Associate Professor, Marketing at the Ted Rogers School of Management at (then) Ryerson University. She was qualified as an expert in the area of marketing and marketing research, branding and brand equity, consumer behaviour, perception and decision making and consumers’ reaction to paper‑based objects and the impact of marketing activities. Dr. McNeish testified on the impact of the At Issue Stickers on consumer purchasing decisions, brand equity and loyalty, and the goodwill attached to Energizer’s brand.
(b) Dr. William A. Adams
[22] Dr. Adams is a physical chemist with a PhD in physical chemistry, having worked in the battery field since 1977. He was qualified as an expert in the area of electrochemistry and in the design, development, research and testing of batteries, including comparative battery testing and battery technology in various applications, including the analysis of battery testing data. He provided testimony regarding testing of the At Issue Batteries in the context of the claims on the At Issue Stickers.
(c) A. Scott Davidson
[23] Mr. Davidson is a chartered professional accountant and a chartered business valuator with Kroll Canada Limited. He was qualified as an expert in accounting, business valuation, and financial loss and damage quantification, including the assessment of losses and accounting of profits in commercial and intellectual property disputes, including in relation to trademarks. Mr. Davidson testified about Duracell’s profits, Energizer’s damages and other figures related to Duracell’s use of the At Issue Stickers. His testimony was based on an initial expert report and a reply report to Mr. Harington’s initial expert report.
(2) Duracell’s Experts
[24] The Defendants rely on the evidence of the following experts: (a) Dr. Ceren Kolsarici; (b) Dr. Jay F. Whitacre; and (c) Andrew C. Harington, including Mr. Harington’s sur-reply report.
(a) Dr. Ceren Kolsarici
[25] Dr. Kolsarici is the Director of the Scotiabank Centre for Customer Analytics and an associate professor of marketing and analytics at Queen’s University. She was qualified as an expert in marketing and advertising, including consumer behaviour and marketing analytics. Dr. Kolsarici’s expert evidence was provided in response, and as a contrast, to Dr. McNeish’s approach to considering the context of the consumer experience and decision making when purchasing batteries in a retail setting.
(b) Dr. Jay Whitacre
[26] Dr. Whitacre is the Director of the Wilton E. Scott Institute for Energy Innovation at Carnegie Mellon University in Pittsburgh, Pennsylvania. He obtained his masters and PhD in materials science and engineering from the University of Michigan. He was a post‑doctoral scholar at the California Institute of Technology and worked at the Jet Propulsion Lab and at NASA. Dr. Whitacre was qualified as an expert in the design and construction of batteries, and battery testing and performance, including comparative battery performance. His evidence was provided in response to Dr. Adams’ evidence.
(c) Andrew C. Harington
[27] Mr. Harington is a chartered accountant, chartered business valuator and chartered financial analyst with The Brattle Group. He was qualified as having expertise in investigative and forensic accounting, business valuation and damage and loss of profit quantification in commercial and intellectual property disputes. Mr. Harington’s testimony was based on an initial expert report and a sur-reply report to Mr. Davidson’s reply report.
IV. Parties’ Fact Witnesses [28] Below is a summary of the parties’ fact witnesses and an overview of the evidence they provided.
(1) Energizer’s Fact Witnesses
[29] Jeffrey Roth is the Global Category Leader Battery Division at Energizer. He testified regarding: (a) the Energizer corporate organization and trademark licencing; (b) competition in the marketplace for household batteries; and (c) the use of Energizer trademarks in Canada, including promotion and advertising.
[30] Joshua Showers is the Global Director for Quality and Supplier Development for Energizer Holdings. He testified regarding the constructions of Energizer batteries sold in Canada as Energizer Max AA batteries, and Energizer’s testing of batteries in accordance with the ANSI and IEC standards. (These are standards set respectively by the American National Standards Institute’s American National Standards Committee, and the International Electrochemical Commission’s Technical Committee.)
[31] Daniel Durbin is a Director of Batteries Research and Development at Energizer. He testified regarding Energizer’s testing of batteries to provide technical support to corporate customers, retail partners and device designers, overlapping battery testing summaries, and statistical methods and thresholds for substantiating product claims.
[32] With the Court’s permission during trial, David Colin Decker, a PhD candidate at the University of Toronto in the Department of Statistical Sciences, testified regarding the merged data sets compiled from Duracell’s testing of AA batteries and HA batteries relied on by Drs. Adams and Whitacre, and the histograms he prepared using Duracell’s testing data.
[33] Ryan Sedlak is Vice President, Global Finance Business Partnering at Energizer Holdings and spoke about Energizer’s financial records, as well as related information pertaining to how Energizer accounts for sales and costs.
[34] Kelley Vacca is Senior Director of Global Business Intelligence at Energizer Holdings and testified about data from Nielsen and other compilers of marketplace data. She explained that Nielsen data was an estimate of the market based on data from retailer checkouts, to which Nielsen made adjustments to account for retailers that do not provide data, in order to predict the entire market.
[35] Kim Ly and Marta Wysokinski provided evidence by way of affidavits that were taken as read‑in, with the agreement of the Court and the parties. Their evidence confirmed that packages of Duracell HA batteries with the words “vs. the bunny brand” remained available for sale at retailers in Canada in July 2017, and even as recently as January 2020.
(2) Duracell’s Fact Witnesses
[36] Cecile Lach Hui is the Group Director, Corporate Finance at Procter & Gamble Canada Inc. [P&G], and has worked with P&G since 1992 in various roles. P&G previously owned Duracell before Berkshire Hathaway acquired Duracell in 2016. Ms. Lach Hui testified about Duracell’s accounting records up to February 2016, and testified that the volume of Duracell’s sales were tracked either as a number of packages, a number of batteries, or a number of displays or crates.
[37] Aric Tai is the Senior Finance Manager at Duracell U.S. Operations Inc., a position he has held since July 2020. He testified about Duracell’s accounting records after March 2016, and that the volume of Duracell’s sales were tracked either as a number of packages, a number of batteries, or a number of displays. He also stated that different retailers may order by package or by case, but there was no rule in terms of customers using a specific metric; it was dependent on how Duracell set up each brand code.
[38] Ramon Velutini is the Global Chief Marketing Officer Duracell U.S. Operations Inc. and President of Duracell Latin America. He was the Senior Brand Manager for Duracell North America from 2014 to 2016. He testified about Duracell’s marketing campaign involving the At Issue Stickers.
[39] Raymond Iveson is the Senior Vice-President and Senior Research Fellow, Research & Development at Duracell U.S. Operations. He joined Duracell in 2014 and assumed his current role in December 2021. He testified about Duracell’s internal battery testing.
[40] Bradley (or Brad) Elliott is North America Packaging Development, Quality Assurance Director Duracell U.S. Operations, a position he has held since 2020, having been working for that company since 1984. He testified about how Duracell tracks packages, including packages shipped to Canada.
[41] During the trial, the Court permitted Andrew Harington to provide fact evidence regarding his agglomeration of data, or preparation of a merged data set, on which Dr. Kolsarici relied in her Difference in Difference [DID] analysis, as discussed in greater detail below in the Analysis section under the heading “Preliminary Issue: Energizer’s Objections to Expert Evidence.”
V. Procedural History, including Duracell’s Motion for Summary Judgment [42] The following is a summary of the procedural history leading to the trial of this matter.
[43] Energizer filed their Statement of Claim on September 21, 2015, claiming that Duracell’s packaging and point‑of‑sale display materials used the Energizer Trademarks in a manner that was likely to have the effect of depreciating the value of the goodwill attached to the trademarks, contrary to subsection 22(1) of the Trademarks Act, RSC 1985, c T-13 [TMA]. Energizer later filed an Amended Statement of Claim on December 11, 2015 and a Second Amended Statement of Claim on October 18, 2016. The latter amended pleading claimed: Duracell’s packaging and point-of-sale display materials made false or misleading statements tending to discredit Energizer’s batteries contrary to paragraph 7(a) of the TMA; were materially false and likely to mislead the public as to the character, quality and performance of Energizer’s batteries contrary to paragraph 7(d) of the TMA; and that Duracell had knowingly or recklessly made representations that were false and misleading in a material respect, contrary to subsection 52(1) of the Competition Act, RSC, 1985, c C-34 [Competition Act]. Energizer sought an accounting of profits for breach of subsection 52(1) of the Competition Act.
[44] Duracell’s Amended Statement of Defence denied Energizer’s claims and requested that the action be dismissed with costs on a solicitor and client basis.
[45] On February 14, 2018, Duracell brought a motion for summary judgment to dismiss certain allegations in Energizer’s Second Amended Statement of Claim. Specifically, Duracell sought to dismiss Energizer’s claims that Duracell used the terms “the next leading competitive brand” and “the bunny brand” and their equivalent phrases in French on labels attached to packages of Duracell’s batteries contrary to paragraphs 7(a) and (d) and subsection 22(1) of the TMA. Duracell also sought to dismiss Energizer’s claim for an accounting of profits under subsection 52(1) of the Competition Act.
[46] Justice Brown granted the Duracell’s summary judgment motion in part: Energizer Brands, LLC v The Gillette Company, 2018 FC 1003 [Energizer FC 2018]. He concluded that use of the term “the bunny brand” on Duracell’s battery packaging could offend subsection 22(1) of the TMA, having regard to the Supreme Court of Canada’s decision in Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23 [Veuve Clicquot], and also could offend paragraphs 7(a) and (d) of the TMA. He therefore was not prepared to “strike” these claims.
[47] Justice Brown had a different view, however, of Duracell’s use of the term “the next leading competitive brand” and effectively dismissed the claims under these same provisions of the TMA involving the latter term.
[48] Finding that Energizer had no right to an accounting of profits under subsection 52(1) of the Competition Act, Justice Brown dismissed this claim on the basis that as a matter of law, the effect of subsection 36(1) of the Competition Act is to limit remedies for breach of subsection 52(1) to the recovery of a plaintiff’s actual loss or damage.
[49] Energizer appealed this judgment to the Federal Court of Appeal. Duracell cross‑appealed from the part of the judgment that dismissed its motion for judgment with respect to Duracell’s use of the phrase “the bunny brand.”
[50] The Federal Court of Appeal set aside the judgment of the Federal Court in part and dismissed Duracell’s cross‑appeal: Energizer Brands, LLC v The Gillette Company, 2020 FCA 49 [Energizer FCA 2020] at para 61. In particular, the Federal Court of Appeal allowed Energizer’s appeal of the Federal Court’s dismissal of Energizer’s claims under paragraphs 7(a) and 7(d) and subsection 22(1) of the TMA in respect of Duracell’s use of the phrase “next leading competitive brand.” In other words, these claims were restored for the eventual trial of the matter.
[51] With respect to the issues concerning the TMA, the Federal Court of Appeal found that Duracell’s notice of motion did not put in issue the question of whether the phrases used by Duracell were sufficiently similar to the Energizer Trademarks (to evoke in consumers the necessary linkage between them). The Federal Court thus should not have addressed it because doing so deprived Energizer of the opportunity to make its case on the issue.
[52] With respect to the issues concerning the Competition Act, the Federal Court of Appeal held that the Federal Court correctly dismissed Energizer’s claim for an accounting of profits because the limiting words of subsection 36(1) are clear and limiting (to compensation only for loss, damage and costs). Further, the question of whether equitable remedies are available under subsection 52(1) is a pure question of law that appropriately may be decided on a motion for summary judgment. The question of whether Energizer is entitled to an accounting of profits pursuant to subsection 52(1) of the Competition Act thus no longer is in issue.
[53] The parties subsequently filed fresh as amended pleadings. Although Energizer’s fresh as amended pleadings refer to Duracell’s “product packaging and point‑of‑sale materials,” I find that only the At Issue Stickers used on the packaging in fact are in issue in this action. It is not clear from the pleadings if Energizer intended that the terms “product packaging” and “point‑of‑sale materials” would be considered different media or would be read interchangeably or as alternative phrases, but nothing turns on this in my view as I explain below.
VI. Trial Issues [54] In light of the foregoing, and with regard to the parties’ Agreed Statement of Issues, I find that the main issues for determination in the trial of the Plaintiffs’ action are:
A.Have the Defendants used one or more of the Plaintiffs’ registered trademarks in a manner likely to have the effect of depreciating the value of the goodwill attaching to the trademark(s), contrary to the TMA s 22(1)?
B.Have the Defendants made false or misleading statements or descriptions in the following, more particularized respects:
(1)Have the Defendants made a false or misleading statement tending to discredit the Plaintiffs’ business or goods, contrary to the TMA s 7(a)?
(2)Have the Defendants used, in association with their goods, any description that is false in a material respect and likely to mislead the public as to the character, quality or performance of the Defendants’ goods, contrary to the TMA s 7(d)?
(3)Have the Defendants, for the purpose of promoting, directly or indirectly, the supply or use of a product, or any business interest, by any means whatever, knowingly or recklessly made a representation to the public that is false or misleading in a material respect, contrary to subsection 52(1) of the Competition Act, RSC 1985, c C-34?
C.Are the Defendants’ impugned activities permitted by Agreement with the Plaintiffs?
D.To what remedies are the Plaintiffs entitled, and in what amounts where applicable, if they establish any of issues A‑C above, and the Defendants do not establish issue C (or, even if established, the Agreement is not a complete answer or defence), including injunctive relief, damages or an accounting of profits, punitive or exemplary damages, prejudgment interest and costs?
VII. Analysis [55] In the course of trial, Energizer raised objections to the evidence of Duracell’s experts and addressed the objections more fully in closing submissions. I deal with these objections as a preliminary issue in this Analysis.
Preliminary Issue: Energizer’s Objections to Expert Evidence (1) Dr. Kolsarici
[56] For the reasons below, I determine that a portion of Dr. Kolsarici’s expert report will be excluded.
[57] I start my analysis of Energizer’s objection to Dr. Kosarici’s expert evidence with the premise that “[e]vidence that is otherwise logically relevant may be excluded… if its probative value is overborne by its prejudicial effect”: R v Mohan, 1994 CanLII 80 (SCC), [1994] 2 SCR 9 at 21; White Burgess Langille Inman v Abbott and Haliburton Co., 2015 SCC 23 at para 19.
[58] Dr. Kolsarici performed a DID analysis that formed the basis of her expert opinion about the impact of the Sticker Campaign on the sales of the relevant DURACELL batteries. She describes in her report that DID is a quasi-experimental design that makes use of treatment and control groups based on longitudinal data to obtain appropriate counterfactuals to estimate a causal effect. The goal in the DID estimation is to control for unobserved variables (such as the parties’ other marketing activities or industry conditions) that can bias the estimates of the causal effects.
[59] In addition, according to Dr. Kolsarici, the DID technique permits the evaluation of whether the difference in the differences is statistically different from zero. A statistically significant positive value points to the Sticker Campaign having caused an economically meaningful lift in battery sales volumes for Duracell, while the converse would mean a drop in sales for Duracell.
[60] It was revealed during cross-examination at trial that Dr. Kolsarici did not disclose in her report that her PhD student (“Simon”) assisted with portions of the data analysis conducted in connection with the DID analysis. Nor had Dr. Kolsarici disclosed, prior to cross‑examination, that she had asked Duracell to prepare “a more collected and cleaned-up version of the data” which resulted in Dr. Kolsarici being provided with two data files.
[61] I agree with Duracell that they addressed the latter omission conclusively during the trial. I note, for example, that after the omission came to light, Mr. Harington was called as a fact witness to testify about having prepared the merged data set (comprising an agglomeration of the data contained in Duracell Productions 70 and 110 to 119). I also note that Duracell Productions 110 to 119 are listed in a schedule to the parties’ Agreement Respecting Evidence. Specifically, the parties agreed that listed documents would be admissible at trial for the truth of their content without further proof. Although Duracell Production 70 is not listed, nonetheless I find that Mr. Harington’s testimony about the preparation of the merged data set from these productions answers Energizer’s hearsay objection.
[62] Simon’s involvement, however, is a different issue in my view. This is not a case where Dr. Kolsarici attributed statements or work to Simon, as contemplated in Coldwater First Nation v Canada (Attorney General), 2019 FCA 292 at paras 43‑44. Rather, there was no mention of him at all in her expert report. I contrast this omission with the statement in Mr. Harington’s expert report, for example, to the effect that he prepared the report with the assistance of other professionals under his direction and supervision, and with that of Dr. Whitacre in his expert report to the effect that he instructed and oversaw counsel in performing numerous calculations (regarding battery performance) and then reviewed the calculations to confirm their accuracy.
[63] Dr. Kolsarici explained in cross‑examination that while she and Simon performed the same exercise separately, they arrived at the same results. She also admitted, however, that they individually were using different data sets at different stages of the analysis, and further, that Energizer could have been provided with the data set of either of them.
[64] Dr. Kolsarici also testified that only Simon prepared the CSV files that were fed into the “R” computer program, as a final step, to perform the regression analysis. According to Dr. Kolsarici, she did not prepare any of them because it just involved splitting the same data into four and it was not a complex part of the analysis. Complex or not, in my view these steps represent a significant part of Dr. Kolsarici’s methodology and the tests she relied on to prepare her opinion.
[65] Contrary to Duracell’s position on this issue, I find that Simon’s involvement in the data analysis was more than simply as “support staff” or a “technician” and, thus, should have been disclosed to Energizer. That Simon did not find any errors in Dr. Kolsarici’s work that would have changed her analysis, as she testified, misses the point in my view because, at the very least, Dr. Kolsarici relied on Simon’s work as a double check of her own work, so much so that, as she admitted in cross‑examination, it was either of their work product that was provided to Energizer. I infer in the circumstances that Dr. Kolsarici saw value in having Simon perform the double check, rather than double‑checking her work herself. Further, no explanation was provided how, when using different data sets at different stages of the analysis, Dr. Kolsarici and Simon arrived at the same result.
[66] I am convinced on a balance of probabilities that based on this evidence, Simon, a PhD student, and not a summer student for example, was more than just “support staff” or a “technician.”
[67] The FCR append a Schedule (under Rule 52.2) entitled “Code of Conduct for Expert Witnesses” [Code]. The Code itemizes with particularity what an Expert’s Report shall include. Paragraph 3(i) describes “a summary of the methodology used, including any examinations, tests or other investigations on which the expert has relied, including details of the qualifications of the person who carried them out, and whether a representative of any other party was present.” [Emphasis added.]
[68] Schedule “B” to Dr. Kolsarici’s Expert Report is a signed Certificate Concerning Code of Conduct for Expert Witnesses certifying that she has read the Code.
[69] I find that the words “any examinations, tests or other investigations on which the expert has relied” are broad enough to capture the work performed by Simon in connection with the DID analysis, such that his qualifications (including, inherently, his identity) should have been disclosed in Dr. Kolsarici’s Expert Report, thereby affording Energizer the opportunity to consider the impact of this knowledge on its litigation strategy and to make whatever consequential, permitted adjustments it deemed necessary. Energizer unknowingly was deprived of this opportunity, to its prejudice.
[70] I add that I am not persuaded by Duracell’s attempt to draw a parallel with the assistance Energizer’s expert, Scott Davidson, received from Katie Gosnell. Unlike Dr. Kolsarici, Mr. Davidson disclosed in his expert and reply reports that he was assisted by Ms. Gosnell who worked under his supervision and direction. Duracell thus was not deprived of the opportunity to take this information into account in their litigation strategy leading to trial, unlike the situation that Energizer faced when they first learned of Simon’s involvement in Dr. Kolsarici’s DID analysis at trial.
[71] Noting that the FCR Rule 52.2(2) gives the Court discretion to exclude some or all of the expert’s affidavit or statement, I exercise my discretion to exclude that portion of Dr. Kolsarici’s expert report dealing with the DID analysis, specifically paragraphs 258‑272. In my view, this remedy is proportional in this case to Dr. Kolsarici’s failure to comply with para 3(i) of the Code. Further, I am not persuaded that the outcome of this action turns on the presence or absence of Dr. Kolsarici’s DID analysis.
(2) Dr. Whitacre
[72] Contrary to Energizer’s submissions, I am not persuaded that parts of Dr. Whitacre’s evidence should be discounted on the grounds raised, with an exception that in my view is inconsequential.
[73] Energizer contends that Dr. Whitacre’s evidence should be given less weight because his experience in AA batteries was limited to a “small number” of AA alkaline batteries for a company he founded called Scaled Ionics LLC, and because he ventured into areas that he is not an expert in such as statistics and consumer behaviour. Regarding the former, Energizer has failed to convince me that Dr. Whitacre’s expertise in respect of AA batteries was somehow constrained or lessened by reason of the number of AA batteries with which he had experience.
[74] Regarding the issue of whether Dr. Whitacre’s expert report strayed beyond his expertise, Dr. Whitacre confirmed that he was not present as an expert in statistics. While he commented in his expert report on the absence of a “statistically significant” correlation between battery age and performance over the relevant periods, he clarified (based on his opinion, I infer), and in more plain language, that Dr. Adams did not show that Duracell gained a real advantage in the testing just because Duracell batteries were 73 days younger on average. In the circumstances, although I am prepared to give little weight to the statement about a lack of statistical significance, I am not persuaded that it makes much difference in light of Dr. Whitacre’s clarification.
[75] I further find that Dr. Whitacre’s references to the “consumer experience” were not about consumer behaviour as such, but rather they were about describing, in a plain and obvious way, relative battery performance (that a consumer may encounter or experience upon the purchase and use of batteries) by testing batteries obtained from the marketplace. In my view, this is exemplified by Dr. Whitacre’s statement in his expert report that, “[t]esting batteries purchased from the market is the best way to simulate the customer’s experience of comparative performance.”
[76] Energizer also argues that the criticisms of Dr. Adam’s expert report must be tempered by Dr. Whitacre’s admission that Dr. Adams fulfilled the mandate he was given. I find, however, that Dr. Whitacre’s criticisms rest in the instructions Dr. Adams was given.
[77] I will deal with Dr. Whitacre’s evidence in further detail in connection with the analysis of whether Duracell made false or misleading statements or descriptions.
(3) Andrew Harington
[78] Contrary to Energizer’s submissions, I am not persuaded that the Code breaches they say Mr. Harington committed align with those of Dr. Kolsarici described above. As I explain, I find that the probative value of Mr. Harington’s evidence outweighs any possible prejudicial effect.
[79] Energizer’s complaint about asserted breaches of the Code are two-fold. First, they submit that Mr. Harington breached paragraph 3(d) of the Code because, as he testified, he spoke with employees of Duracell to understand the Duracell sales transaction documents, but did not disclose such discussions anywhere in his report. According to Energizer, Mr. Harington also did not identify in his report the information on which he relied that he obtained from these discussions. Energizer points to Mr. Harington’s own “template” expert report that included “documents and discussions” in his Scope of Review, and submits that no discussions were described in this case.
[80] I note Mr. Harington’s testimony that his discussions with Duracell employees were for the purpose of confirming his understanding of the information conveyed in the documents he was provided, and further, that the employees did not tell him anything he could not see in the documents themselves. He gave an example of a battery size associated with a brand code where the size sometimes was referred to as 10 and sometimes was referred to as 10/230.
[81] I find there is no evidence, however, that Duracell employees assisted Mr. Harington in his analysis of the data. Further, unlike the case with Dr. Kolsarici’s report, Mr. Harington’s expert report states that it was prepared with the assistance of other professionals under his direction and supervision, whose identities he provided in cross-examination when asked for this information.
[82] Second, Energizer argues that Mr. Harington failed to provide “a summary of the methodology used,” as required under paragraph 3(i) of the Code. Footnote 6 is the only description in his report of the data aggregation process, a process they contend resulted in material errors. They add that Mr. Harington also did not disclose his use of the “R” computer program for the data aggregation process. Regarding the latter, I observe that Mr. Davidson similarly did not describe what software program(s) he used to prepare his analysis, and further, the parties and their expert witnesses relied on Excel spreadsheets and applicable software tools at trial to demonstrate conclusions that could be drawn from the various data productions.
[83] I also note that footnote 6 details the productions Mr. Harington relied on in his analysis. Although Mr. Harington testified that he referred to Duracell Production 70 to confirm the applicable brand codes, in my view this does not undermine his statement in footnote 6 that he did not rely on this production because it contains dollar value sales rather than unit sales. I find that his testimony was consistent with this reason for not relying on this production otherwise.
[84] In the circumstances, I am not convinced that Mr. Harington’s expert evidence should be given little weight as Energizer argues. Further, I conclude the probative value of Mr. Harington’s evidence, that involves a causation analysis, outweighs any potential prejudice.
A. Depreciation of Goodwill? [85] I find that Energizer has shown likely depreciation of goodwill in its registered trademarks ENERGIZER and ENERGIZER MAX by Duracell’s Sticker Campaign in a manner contemplated by the TMA s 22(1) with regard to the Energizer HA Sticker and the Energizer MAX AA Sticker. I am not persuaded, however, that Energizer has established depreciation of goodwill in connection with the Bunny Brand HA Sticker and the Next Leading Competitive Brand AA Sticker. Below is a summary of the legal principles and marketing concepts that I considered in arriving at this determination, followed by my analysis.
(1) Legal Principles
[86] This Court accepts that “[c]omparative advertising helps consumers make better choices”: Petline Insurance Company v Trupanion Brokers Ontario Inc., 2019 FC 1450 [Petline] at para 9, citing Kirkbi AG and Lego Canada Inc v Ritvik Holdings Inc et al, 2003 FCA 297 at para 71, aff’d 2005 SCC 65.
[87] That said, section 22 of the TMA limits comparative advertising in Canada by stipulating 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.
[88] To succeed in a claim for depreciation of goodwill, a plaintiff must meet the four‑part, conjunctive test described by the Supreme Court of Canada as follows: (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 go