Kirkbi AG v. Ritvik Holdings Inc.

Kirkbi AG v. Ritvik Holdings Inc.
Court (s) Database
Federal Court Decisions
Date
2002-05-24
Neutral citation
2002 FCT 585
File numbers
T-2799-96
Notes
Digest
Decision Content
Date: 20020524
Docket: T-2799-96
Neutral citation: 2002 FCT 585
BETWEEN:
KIRKBI AG and LEGO CANADA INC.
Plaintiffs/
Defendants by counterclaim
and
RITVIK HOLDINGS INC. / GESTIONS RITVIK INC.
Defendant /
Plaintiff by counterclaim
REASONS FOR JUDGMENT
GIBSON J.:
INTRODUCTION
[1] These reasons follow the trial of an action in which KIRKBI AG ("KIRKBI") and LEGO Canada Inc. ("LEGO Canada"), (collectively "the plaintiffs"), sought to prove that the defendant Ritvik Holdings Inc./Gestions Ritvik Inc. ("Ritvik") has directed public attention to its wares in such a way as to cause or to be likely to cause confusion in Canada, at the time it commenced so to direct attention to its wares, between its wares and the wares of the LEGO group of companies[1]. The foregoing is essentially a restatement of paragraph 7(b) of the Trade-marks Act[2] (the "Act") and, and more will be said of this later, of the common law concept of "passing off".
[2] The allegation of passing off relates particularly to the alleged adoption by Ritvik, and to the alleged extensive use in its promotion and marketing of its MICRO line of building blocks, of what the plaintiffs and their associated companies (the "LEGO group") refer to as the "LEGO Indicia trade mark". That mark is diagrammed and described as follows:
LEGO Indicia trade mark:
a rectilinear array of uniform, smooth-sided, flat-topped, cylindrical, co-planar protuberances, the proportions of height, diameter and center-to-center spacing of which are approximately 2 : 5 : 8. Where there is more than one row of protuberances, they are arranged in mutually orthogonal rows and columns.
It is best exemplified by what is usually described as the upper surface of the well-known LEGO toy building block in perhaps its most well-known configuration with eight (8) protuberances or studs on the surface. Throughout the trial, this configuration of the LEGO block was described as the 2 x 4 LEGO block since the studs are "arrayed" in two mutually "orthogonal" rows and columns, each consisting of four studs.
[3] More particularly, in their Second Amended Statement of Claim filed the 11th of January, 2002, the plaintiffs allege:
..., since approximately 1991, [Ritvik] has sold building bricks and other parts to which have been applied the LEGO Indicia trade mark. [Ritvik's] building bricks and other parts are characterized by the same features described above which characterize the LEGO Indicia trade mark, namely a rectilinear array of uniform, smooth-sided, flat-topped, cylindrical, co-planar protuberances, the proportions of height, diameter and center-to-center spacing of which are approximately 2 : 5 : 8. Where there is more than one row of protuberances, they are arranged in mutually orthogonal rows and columns.
[Ritvik's] building bricks and other parts are sold in containers and packages which display both the bricks and other parts and sets made from such bricks and other parts. At least some of [Ritvik's] packaging is formed with lids to which the LEGO Indicia trade mark has been applied. [Ritvik's] building bricks and other parts are also made with identical shades of red, white, blue, yellow, green and black as those of the LEGO Components.
[Ritvik] sells its toys, namely building bricks and other parts, in the same channels of trade as the Plaintiffs and in the same types of stores. In many cases, the toys of the Plaintiffs and [Ritvik] appear side by side on store shelves. The similarity in the toys and their packaging makes it difficult for consumers to distinguish between the toys of the Plaintiffs and those of [Ritvik]. Further, the "trade marks" adopted by [Ritvik] do not reduce the likelihood of confusion because they are highly suggestive, if not clearly descriptive expressions such as MEGA BLOKS, MEGA BLOKS +, MEGA WEE BLOKS, and MICRO MEGA BLOKS, which are lacking in inherent distinctiveness. The use of such words on packages which resemble those used by the Plaintiffs, to sell toys, namely building bricks and other parts, and to which the LEGO Indicia trade mark has been applied, increases rather than decreases the likelihood of confusion between the Plaintiffs'goods and those of [Ritvik].
[4] At the close of the trial, I reserved my decision and indicated that these reasons and the related judgment would follow. For ease of reference, an "index" to these reasons, by headings and subheadings referenced to both page and paragraph numbers, is attached as an annex.
BACKGROUND
[5] At the opening of trial, counsel formally presented to the Court, as a joint exhibit, an Agreed Statement of Facts[3]. It is in the following terms:
A The Plaintiffs:
1. The Plaintiff, KIRKBI AG is a Swiss corporation with its head office in Switzerland. It is a holding company whose business is management of assets including trade-marks.
2. The Plaintiff, LEGO Canada Inc. was incorporated under the laws of Ontario in May, 1988 and has its head office located in 45 Mural Street, Unit 7, Richmond Hill, Ontario.
3. The Plaintiffs are both members of the LEGO Group of Companies. The LEGO Group also includes INTERLEGO A.G., INTER LEGO A/S, [and] LEGO Systems Inc.
4. KIRKBI AG is owned by Mr. Kjeld Kirk Kristiansen and his sister. LEGO Canada Inc is wholly owned by INTERLEGO AG, which is wholly owned by Mr. Kjeld Kirk Kristiansen. Mr. Kjeld Kirk Kristiansen is Chairperson of the Board of Directors of the LEGO Foundation. The LEGO Foundation and the companies within the LEGO Group are all owned directly or indirectly by the Kirk Kristiansen family and in particular Mr. Kjeld Kirk Kristiansen.
B. The Defendants:
5. Ritvik Holdings Inc. is a company incorporated under the laws of Canada with its head office in St. Laurent, Quebec.
6. Ritvik Toys Inc. made and sold the MICRO line of MEGA BLOKS toys in Canada until its dissolution.[4]
7. Ritvik Toys Inc. was dissolved in 1998 and no longer exists. Since its dissolution, Ritvik Holdings Inc. has made and sold the MICRO line of MEGA BLOKS toys in Canada.
8. All the assets and liabilities of Ritvik Toys Inc., including any and all liability in this action, have been assumed by Ritvik Holdings Inc. (hereinafter referred to as "Ritvik"). A discontinuance of this action against Ritvik Toys Inc. does not affect the liability of Ritvik Holdings Inc. for the actions of Ritvik Toys Inc. during the period from 1991 to the date of dissolution of Ritvik Holdings Inc. continues in this action in the place of Ritvik Roys Inc.
C. LEGO Toys
9. Mr. Godtfred Kirk Christiansen (the father of Mr. Kjeld Kirk Kristiansen) and his father Mr. Ole Kirk Christiansen (the grandfather of Mr. Kjeld Kirk Kristiansen), the founder of The LEGO Group of Companies, obtained samples of KIDDICRAFT self-locking toys in 1947 or 1948.[5]
10. The samples of KIDDICRAFT self-locking toys led Godtfred Kirk Christiansen to make the first LEGO toys.
11. LEGO toys were sold in Canada during the term of the Page Canadian patent No. 443,019.[6]
12. Members of The LEGO Group have sold and continue to sell plastic construction toys under the trade-mark LEGO since 1949.
13. The trade-mark LEGO is registered in Canada.
14. The appearance of the exterior of 2 x 4 LEGO bricks sold in Canada has remained essentially the same since at least 1961.
15. Since 1961, the same shades of red, white, blue, yellow, green and black have been used for LEGO bricks. In addition many other colours have been used.
16. LEGO products have been sold in Canada in the form illustrated in the catalogs commencing in the year of the catalog.[7]
17. LEGO products have been sold throughout Canada in many retail outlets including many large chain stores such as Eaton's, The Bay, Zellers, Toys ‘R' Us, Sears, Wal-Mart and the Price Club.
18. Since 1961, many millions of LEGO sets have been sold in Canada. LEGO products are the highest selling construction toys in Canada.
19. LEGO products are advertised in television advertising, print advertising and trade shows in Canada.
20. Sales of LEGO products in Canada since 1989 are as follows:
1989 - $17,742,095 1990 - $21,509,799 1991 - $29,413,378 1992 - $37,634,235 1993 - $41,350,371 1994 - $37,682,728 1995 - $39,299,022 1996 - $44,712,879 1997 - $43,438,311 1998 - $44,092,846
D Ritvik's Toys:
21. Mr. Victor Bertrand Senior Founded Ritvik Toys Inc. in 1967.[8]
22. The trade-marks RITVIK, MEGA BLOKS and MICRO MEGA BLOKS are registered in Canada.
23. In 1985 Ritvik began making and selling in Canada construction toys under the trade-mark MEGA BLOKS comprising oversized bricks intended specifically for infants, each brick having cylindrical projections or knobs on one side which connect into the opposite side of another brick without clutch power. These construction toys were renamed MAXI MEGA BLOKS in 1991.[9]
24. In 1989, Ritvik introduced a second line of toys comprising bricks and parts that are smaller in size than the MAXI line, each having cored-out cylindrical projections or knobs on one side which connect into the opposite of another piece. This line was originally called MEGA "WEE" BLOKS and, in 1991, the name was changed to the MINI line of MEGA BLOKS.
25. In 1991, Ritvik began making and selling its MICRO line of MEGA BLOKS construction toys. The MICRO line is the subject matter of this action.
26. In 1997, Ritvik introduced the BABY SOFT BLOCKS line of MEGA BLOKS comprised of soft oversized bricks and parts for infants 3 to 18 months. This line has been rebranded as BABY MEGA BLOKS.
27. Ritvik's MICRO toys are made from high impact polystyrene plastic and other materials.[10]
28. LEGO brand construction toys and MEGA BLOKS brand construction toys are sold through the same channels of trade.
E Retail Market:
29. Large retailers generally display all construction toys together and LEGO brand construction toys and MEGA BLOKS brand construction toys are often found in the same section of a store.
F The LEGO INDICIA:
30. The plaintiffs assert in this case, as a "distinguishing guise", the shaping of the knob configuration of LEGO products.
G Functionality:
31. All or some of the knobs of one LEGO piece may be connected to all or some part of the underside of another LEGO piece. The "clutch power" between connecting pieces is developed by the friction between the knobs on the one piece and the tubes and/or walls of the underside of the other piece.
H Patents
32. Mr. Harry Fisher Page, a British citizen, designed, manufactured and sold toy brick construction sets with cylindrical knobs that were marketed under the brand, KIDDICRAFT.
33. Mr. Page patented his self-locking building bricks, in the United Kingdom, Canada and France. These patents have now expired. His patents include the following:
a. Canadian Patent No. 443,019 issued on July 22, 1947;
b. U.K. Patent No. 529,580 issued on November 25, 1940;
c. U.K. Patent No. 587,206 issued on April 17, 1947;
d. U.K. Patent No. 633,055 issued on December 12, 1949;
e. U.K. Patent No. 673,857 issued on June 11, 1952; and
f. French Patent No. 916,078.
34. The plaintiffs and their privies have obtained patents including:
a. Cdn Patent No. 629,732 to Godtfred Kirk Christiansen issued October 24, 1961, and
b. Cdn Patent No. 880,418 to Godtfred Kirk Christiansen issued September 7, 1971.[11]
[6] In supplementation of the foregoing, the following is derived from the testimony on behalf of the plaintiffs of Mr. Kjeld Kirk Kristiansen, the Chairperson of the Board of Directors of the LEGO Foundation, as noted in the foregoing Agreed Statement of Facts, Mr. Sten Juul Petersen, from 1974 to 1999, in-house counsel for the LEGO group, and Per Norgaard Randers, a long-time and current employee in the LEGO group, and resident in Hong Kong.
[7] The LEGO toys business was founded by Kjeld Kirk Kristiansen's grandfather in 1932 in Billund, Denmark, now the home of the LEGO group's world head office and of the LEGO-Land Park. Originally, the business produced wooden toys. "LEGO" is derived from two Danish words that are the equivalent of "play well".
[8] KIDDICRAFT self-locking toys or bricks were manufactured in Britain and marketed in the United Kingdom, and perhaps elsewhere, from 1947 to 1951. Those toys or bricks exploited the technology disclosed in the Page patents referred to in the Agreed Statement of Facts.
[9] In 1949, the LEGO group first ventured into plastic toys and, more particularly, into plastic building bricks. The first generation of LEGO bricks, produced in 1949, was derived from the KIDDICRAFT bricks. The LEGO group eventually acquired the Page intellectual property underlying the KIDDICRAFT bricks.
[10] A second generation of LEGO bricks was introduced in 1954. The third and current generation of LEGO bricks went into production in 1957 and exhibited for the first time the invention of the first LEGO basic patent, Canadian Patent No. 629,732, the tubes exhibited on the underside of LEGO bricks that enhance the "clutch power" of LEGO bricks.
[11] LEGO bricks have been marketed in Canada since at least as early as 1961. From 1961 until 1988, they were manufactured and marketed in Canada by Samsonite under license from the LEGO group. Late in 1988, Samsonite's license was terminated and LEGO Canada was formed to assume marketing responsibilities in Canada. Since the termination of the Samsonite license, LEGO bricks have not been manufactured in Canada. Today, the LEGO group has manufacturing facilities in Denmark, Switzerland, China and Enfield, Connecticut and, for a regional market, in Korea.
[12] The studs of the upper surface of the LEGO brick have remained an unmodified prominent feature of all LEGO bricks since 1949. Since at least as early as 1958, "LEGO" has been inscribed on the top surface of each stud. The studs and their pattern are widely featured in promotional materials used by LEGO Canada in Canada, including television advertisements, point-of-sale materials and packaging. In the normal course, the inscription "LEGO" is featured on the studs in such materials but this is not universally true.
[13] The LEGO group has been very aggressive in protecting and defending its "goodwill" including "goodwill" based on the configuration of its products. That being said, there was no evidence before the Court that the LEGO Indicia has been identified on packaging or promotional material in Canada as an unregistered but nonetheless claimed element of the "goodwill" of the LEGO group.
[14] The following brief additional background facts relating to Ritvik are derived largely from the testimony of Victor Bertrand Junior, the current chief operating officer of Ritvik.
[15] Ritvik, in whatever corporate form, was founded in 1967 by Victor Bertrand Senior and his wife Rita, the parents of the current chief officers of Ritvik. In its early days, Ritvik was a distributor of toys manufactured by others. In the mid-70s, it began manufacturing its own line of injection moulded pre-school-age toys including ride-on or -in products and plastic furniture.
[16] In the early 80s, Ritvik began to focus increasingly on its self-manufactured product line in an effort to assume greater control of its own destiny. Building blocks were chosen as a focus category, commencing with blocks directed to pre-school children.
[17] In the late 1980s or in 1990, Ritvik determined to "grow" with the children who had become familiar with its pre-school products and in 1991 it introduced its line of MICRO MEGA BLOKS derived from LEGO blocks and TYCO blocks. TYCO building blocks were also derived from LEGO blocks and were marketed extensively in the United States, where they were manufactured, and elsewhere, including in Canada. TYCO withdrew from the building block market at approximately the same time as Ritvik introduced its MICRO line of building blocks.
[18] Ritvik's MICRO line of building blocks now represents approximately one-half of Ritvik's world wide sales. In 2001, Ritvik marketed its toy products into more than 100 countries and was the largest toy maker in Canada both in terms of its number of employees and its volume of sales.
THE RELIEFS REQUESTED
[19] The reliefs requested by LEGO are set out in its Second Amended Statement of Claim in the following terms:
(1) A declaration that the Plaintiff Kirkbi is the owner of the LEGO Indicia trade mark;
(2) A declaration that the Defendant has, by the manufacture and sale of bricks and other parts bearing the LEGO Indicia trade mark, infringed the trade mark rights of the Plaintiff Kirkbi, contrary to law and Section 7(b) of the Trade-marks Act;
(3) A permanent injunction restraining the Defendant, its officers, directors, agents, servant [sic], employees, successors, assigns and licensees, or any related or affiliated company of the Defendant from directly or indirectly
(a) making, using, selling or offering for sale any product in association with the LEGO Indicia trade mark, or any trade mark or representation which is confusingly similar thereto or a colourable imitation thereof; and
(b) directing public attention to their wares or business in such a way as to cause or be likely to cause confusion with the wares or business of the Plaintiffs;
(4) A mandatory injunction requiring the Defendant to deliver up under oath, or under the supervision of the Court, all toys, including building bricks and other parts, moulds for producing same, and all packages, labels, advertising or other materials, the use of which would offend any injunction granted herein, and to take steps to discontinue all other use of the LEGO Indicia trade mark, including on software or on the Internet, or in the alternative, an Order that such materials be destroyed under oath, or under the supervision of this Honourable Court;
(5) Damages in the amount of $25,000,000.00 for the Defendant's unlawful use of the Plaintiff Kirkbi's LEGO Indicia trade mark, for passing off, and actions contrary to Section 7(b) of the Trade-marks Act, or alternatively, an accounting of the Defendant's profits, as the Plaintiffs may elect;
(6) Prejudgment and postjudgment interest;
(7) All applicable taxes, including the Goods and Services Tax, to which the Plaintiffs may be entitled; and
(8) such further and other relief as to this Honourable Court may seem just.
[20] During the course of trial, by agreement, paragraph (7) quoted above, was modified to reflect a request for costs as well as for applicable taxes.
[21] In its counterclaim, Ritvik seeks the following reliefs:
(a) a declaration that the Plaintiff by Counterclaim is entitled to continue to make, offer for sale and sell in Canada its MICRO and MINI lines of toy construction bricks and related parts currently sold in Canada under the trade-mark MEGA BLOKS;
(b) costs of this Counterclaim on a solicitor and client basis, or in the alternative, according to the higher end of Column V of Tariff B of the Federal Court Rules, together with all applicable taxes, including the goods and services tax, to which the Plaintiff by Counterclaim may be entitled;
(c) such further and other order as to this Honourable Court may seem just.
STATEMENT OF ISSUES
[22] At the opening of trial, counsel filed the following joint statement of issues:[12]
Title
1. Do the Plaintiffs have a legal interest in any trade-mark rights that the Plaintiffs assert in Canada in respect of the "Lego Indicia"? This issue does not include quality control of licensees or challenge the authenticity of any of the documents relating to licensing or assignments.
Section 7(b)
2. Which of the following is correct:
(a) the Plaintiffs allege that the "Lego Indicia" is a trade-mark and thus able to support an action under s. 7(b); or
(b) the Defendants allege that it is not a valid trade-mark because it is one or more of the following:
(i) functional;
(ii) claimed and/or disclosed in expired patents,
(iii) non-distinctive, or
(iv) never used by the Plaintiffs as a trade-mark.
3. Have the Defendants contrary to s. 7(b) directed public attention to their "MICRO" construction toys products by using the "Lego Indicia" in such a way as to cause or to be likely to cause confusion in Canada, at the time the Defendants commenced so to direct attention to them, between their "MICRO" toy construction products and the "LEGO" construction toy products of the Plaintiffs?
4. What is the "time the Defendants commenced so to direct attention to them"?
Note: The issue of the extent of infringement and quantification of monetary relief is deferred pursuant to the Order of July 9, 1999.
Estoppel
5. Are the Plaintiffs disentitled to any or all the relief claimed as a result of estoppel, laches or acquiescence?
Limitations
6. Are the Defendants able to claim a limitation period, and if so, what is the applicable limitation period.
[23] While the foregoing statement of issues is admirable for its brevity and simplicity it belies the complexity of the arguments relating to contravention of paragraph 7(b) of the Act. In my analysis, I will deal separately with the various elements of that issue.
RELEVANT STATUTORY LAW
[24] The opening words of section 7 of the Act and paragraph (b) of that section read as follows:
7. No person shall
...
(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;
...
7. Nul ne peut_:
...
b) appeler l'attention du public sur ses marchandises, ses services ou son entreprise de manière à causer ou à vraisemblablement causer de la confusion au Canada, lorsqu'il a commencé à y appeler ainsi l'attention, entre ses marchandises, ses services ou son entreprise et ceux d'un autre;
...
[25] Subsections 6(1), (2), (3) and (5) of the Act read as follows:
6. (1) For the purposes of this Act, a trade-mark or trade-name is confusing with another trade-mark or trade-name if the use of the first mentioned trade-mark or trade-name would cause confusion with the last mentioned trade-mark or trade-name in the manner and circumstances described in this section.
(2) The use of a trade-mark causes confusion with another trade-mark if the use of both trade-marks in the same area would be likely to lead to the inference that the wares or services associated with those trade-marks are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
(3) The use of a trade-mark causes confusion with a trade-name if the use of both the trade-mark and trade-name in the same area would be likely to lead to the inference that the wares or services associated with the trade-mark and those associated with the business carried on under the trade-name are manufactured, sold, leased, hired or performed by the same person, whether or not the wares or services are of the same general class.
...
6.(1) Pour l'application de la présente loi, une marque de commerce ou un nom commercial crée de la confusion avec une autre marque de commerce ou un autre nom commercial si l'emploi de la marque de commerce ou du nom commercial en premier lieu mentionnés cause de la confusion avec la marque de commerce ou le nom commercial en dernier lieu mentionnés, de la manière et dans les circonstances décrites au présent article.
(2) L'emploi d'une marque de commerce crée de la confusion avec une autre marque de commerce lorsque l'emploi des deux marques de commerce dans la même région serait susceptible de faire conclure que les marchandises liées à ces marques de commerce sont fabriquées, vendues, données à bail ou louées, ou que les services liés à ces marques sont loués ou exécutés, par la même personne, que ces marchandises ou ces services soient ou non de la même catégorie générale.
(3) L'emploi d'une marque de commerce crée de la confusion avec un nom commercial, lorsque l'emploi des deux dans la même région serait susceptible de faire conclure que les marchandises liées à cette marque et les marchandises liées à l'entreprise poursuivie sous ce nom sont fabriquées, vendues, données à bail ou louées, ou que les services liés à cette marque et les services liés à l'entreprise poursuivie sous ce nom sont loués ou exécutés, par la même personne, que ces marchandises ou services soient ou non de la même catégorie générale.
...
(5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including
(5) En décidant si des marques de commerce ou des noms commerciaux créent de la confusion, le tribunal ou le registraire, selon le cas, tient compte de toutes les circonstances de l'espèce, y compris_:
(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;
(b) the length of time the trade-marks or trade-names have been in use;
(c) the nature of the wares, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them.
a) le caractère distinctif inhérent des marques de commerce ou noms commerciaux, et la mesure dans laquelle ils sont devenus connus;
b) la période pendant laquelle les marques de commerce ou noms commerciaux ont été en usage;
c) le genre de marchandises, services ou entreprises;
d) la nature du commerce;
e) le degré de ressemblance entre les marques de commerce ou les noms commerciaux dans la présentation ou le son, ou dans les idées qu'ils suggèrent.
[26] The opening words of section 2 of the Act and the definitions "distinguishing guise" and "trade-mark" in that section read as follows:
2. In this Act,
...
2. Les définitions qui suivent s'appliquent à la présente loi
...
"distinguishing guise" means
(a) a shaping of wares or their containers, or
(b) a mode of wrapping or packaging wares
the appearance of which is used by a person for the purpose of distinguishing or so as to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others;
...
« signe distinctif » Selon le cas_:
a) façonnement de marchandises ou de leurs contenants;
b) mode d'envelopper ou empaqueter des marchandises,
dont la présentation est employée par une personne afin de distinguer, ou de façon à distinguer, les marchandises fabriquées, vendues, données à bail ou louées ou les services loués ou exécutés, par elle, des marchandises fabriquées, vendues, données à bail ou louées ou des services loués ou exécutés, par d'autres.
...
"trade-mark" means
(a) a mark that is used by a person for the purpose of distinguishing or so as to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others,
(b) a certification mark,
(c) a distinguishing guise, or
(d) a proposed trade-mark;
...
« marque de commerce » Selon le cas_:
a) marque employée par une personne pour distinguer, ou de façon à distinguer, les marchandises fabriquées, vendues, données à bail ou louées ou les services loués ou exécutés, par elle, des marchandises fabriquées, vendues, données à bail ou louées ou des services loués ou exécutés, par d'autres;
b) marque de certification;
c) signe distinctif;
d) marque de commerce projetée.
...
[27] In relation to the question of appropriate reliefs, subsections 4(1) and (3) and section 53.2 of the Act read as follows:
4. (1) A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred.
...
4. (1) Une marque de commerce est réputée employée en liaison avec des marchandises si, lors du transfert de la propriété ou de la possession de ces marchandises, dans la pratique normale du commerce, elle est apposée sur les marchandises mêmes ou sur les colis dans lesquels ces marchandises sont distribuées, ou si elle est, de toute autre manière, liée aux marchandises à tel point qu'avis de liaison est alors donné à la personne à qui la propriété ou possession est transférée.
...
3) A trade-mark that is marked in Canada on wares or on the packages in which they are contained is, when the wares are exported from Canada, deemed to be used in Canada in association with those wares.
...
(3) Une marque de commerce mise au Canada sur des marchandises ou sur les colis qui les contiennent est réputée, quand ces marchandises sont exportées du Canada, être employée dans ce pays en liaison avec ces marchandises.
...
53.2 Where a court is satisfied, on application of any interested person, that any act has been done contrary to this Act, the court may make any order that it considers appropriate in the circumstances, including an order providing for relief by way of injunction and the recovery of damages or profits and for the destruction, exportation or other disposition of any offending wares, packages, labels and advertising material and of any dies used in connection therewith.
53.2 Lorsqu'il est convaincu, sur demande de toute personne intéressée, qu'un acte a été accompli contrairement à la présente loi, le tribunal peut rendre les ordonnances qu'il juge indiquées, notamment pour réparation par voie d'injonction ou par recouvrement de dommages-intérêts ou de profits, pour l'imposition de dommages punitifs, ou encore pour la disposition par destruction, exportation ou autrement des marchandises, colis, étiquettes et matériel publicitaire contrevenant à la présente loi et de toutes matrices employées à leur égard.
THE EVIDENCE - A GENERAL STATEMENT
[28] The plaintiffs called seventeen (17) witnesses, nine (9) of whom testified to the history, growth and development and the current status of the LEGO group, its engineering, research, design, development and marketing practices, its focus on the quality, safety and reliability of its products and its concern in developing, maintaining and protecting its goodwill, including its goodwill as represented by its intellectual properties. Others within this group of witnesses testified more broadly as to circumstances surrounding the LEGO group's operations in Canada and this lawsuit. Three (3) expert witnesses were called on behalf of the plaintiffs, two (2) of whom testified as to surveys conducted for the purposes of this litigation and the third of whom testified as to the marketing practices in Canada of the LEGO group and Ritvik, and more particularly as to those practices since Ritvik introduced its line of MICRO MEGA BLOKS, and to the impact of those practices. The remaining five (5) witnesses called on behalf of the plaintiffs testified as to their experiences in the purchase of a toy building block product, and in turning to LEGO Canada for advice or assistance, or simply to make a complaint, when the product in question was not a LEGO product but rather a Ritvik product. This testimony as to "confusion" in the market place was supported by substantial documentary evidence on the same issue.[13]
[29] Ritvik called ten (10) witnesses, five (5) of whom testified as to background and surrounding circumstances in relation to Ritvik in much the same way that equivalent witnesses for the plaintiffs testified on their behalf. The remaining (5) witnesses put forward by Ritvik provided expert testimony as to marketing and brand identification or brand management, surveys conducted for the purposes of this litigation on behalf of Ritvik and responses to the plaintiffs' survey evidence, engineering and development of the TYCO block briefly referred to earlier in these reasons, and the application of Gestalt principles to the LEGO Indicia to determine its distinctiveness and the relationship between the expert's conclusion in that regard and the various survey results that were before the Court.
[30] Early in the trial, counsel presented to the Court a joint book of documents, running to seventeen (17) volumes. Most of the documents were taken into evidence following identification by one or more of the witnesses. Certain of the documents, though jointly filed, were objected to on behalf of the plaintiffs on the basis of an alleged litigation or settlement privilege. More will be said later in these reasons about those documents and that objection.
[31] Finally, the plaintiffs filed one hundred and one (101) exhibits in addition to the volumes of documentary exhibits that were jointly filed. One hundred and forty (140) exhibits were filed on behalf of Ritvik.
[32] In my analysis, I will refer in greater detail as required to the evidence that was before me.
ANALYSIS
1) The Legal Interest of the Plaintiffs in the Rights in Canada that they Assert in Respect of the LEGO Indicia
[33] The first three (3) paragraphs of the Agreed Statement of Facts, as reproduced earlier in these reasons, identify KIRKBI as a holding company whose business is management of assets including trade-marks. I am satisfied that the evidence before me establishes that KIRKBI has a proprietary interest and a royalty interest in the LEGO Indicia.
[34] LEGO Canada is the exclusive licensee in Canada of intellectual property of the LEGO group.
[35] Both KIRKBI and LEGO Canada are members of the LEGO group.
[36] In Enterprise Rent-A-Car Co. v. Singer[14], Mr. Justice Pratte, for the Court, wrote at paragraph [5]:
It is now established that paragraph 7(b) [of the Trade-marks Act] is constitutionally valid only insofar as it protects trade-marks. In spite of the generality of its terms, that provision must, therefore, be read as referring only to the protection of trade-marks, registered or unregistered. The plaintiff, in an action under paragraph 7(b) must, therefore, prove that he "owns" a trade-mark that is in need of protection. It is well known that a trade-mark is "acquired by adoption and use". [citations omitted]
[37] I am satisfied that the concept of "ownership" in the foregoing quotation is a flexible one. I am further satisfied on the totality of the evidence before me that KIRKBI and LEGO Canada each have a sufficient "ownership" interest, in Canada, in the LEGO Indicia, to qualify as plaintiffs in this action. Finally on this issue, I am satisfied that my conclusions in this regard are not one that were seriously contested on behalf of Ritvik.
2) The Jurisdiction of this Court
[38] The Federal Court is a statutory Court, not a Court of inherent jurisdiction[15]. Section 20 of the Federal Court Act[16] reads as follows:
20. (1) The Trial Division has exclusive original jurisdiction, between subject and subject as well as otherwise,
(a) in all cases of conflicting applications for any patent of invention, or for the registration of any copyright, trade-mark, industrial design or topography within the meaning of the Integrated Circuit Topography Act; and
(b) in all cases in which it is sought to impeach or annul any patent of invention or to have any entry in any register of copyrights, trade-marks, industrial designs or topographies referred to in paragraph (a) made, expunged, varied or rectified.
20. (1) La Section de première instance a compétence exclusive, en première instance, dans les cas suivants opposant notamment des administrés_:
a) conflit des demandes de brevet d'invention ou d'enregistrement d'un droit d'auteur, d'une marque de commerce, d'un dessin industriel d'une topographie au sens de la Loi sur les topographies de circuits intégrés;
b) tentative d'invalidation ou d'annulation d'un brevet d'invention, ou d'inscription, de radiation ou de modification dans un registre de droits d'auteur, de marques de commerce, de dessins industriels ou topographies visées à l'alinéa a).
(2) The Trial Division has concurrent jurisdiction in all cases, other than those mentioned in subsection (1), in which a remedy is sought under the authority of any Act of Parliament or at law or in equity respecting any patent of invention, copyright, trade-mark, industrial design or topography referred to in paragraph (1)(a).
(2) La Section de première instance a compétence concurrente dans tous les autres cas de recours sous le régime d'une loi fédérale ou toute autre règle de droit non visés par le paragraphe (1) relativement à un brevet d'invention, un droit d'auteur, une marque de commerce, un dessin industriel ou une topographie au sens de la Loi sur les topographies et circuits intégrés.
[39] Clearly subsection 20(2) as quoted immediately above vests this Court with concurrent jurisdiction if a remedy is sought, as here, in respect of an alleged trade-mark under the authority of a constitutionally valid provision of the Trade-marks Act.
[40] The provision of the Act here at issue is paragraph 7(b), quoted earlier in these reasons but repeated here for ease of reference:
7. No person shall
...
(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;
...
7. Nul ne peut_:
...
b) appeler l'attention du public sur ses marchandises, ses services ou son entreprise de manière à causer ou à vraisemblablement causer de la confusion au Canada, lorsqu'il a commencé à y appeler ainsi l'attention, entre ses marchandises, ses services ou son entreprise et ceux d'un autre;
...
[41] In Asbjorn Horgard A/S v. Gibbs/Nortac Industries Ltd. et al.[17], Mr. Justice MacGuigan, for the Court, wrote at pages 323-4 by reference to MacDonald et al. v. Vapor Canada Ltd. et al.[18]:
The Attorney-General of Canada as intervener drew the court's attention to three distinct lines of judicial thought in the MacDonald case. First, neither s-s. 7(e) nor s. 7 as a whole can be sustained as standing alone...
...
Second, neither s-s. 7(e) nor s. 7 as a whole can be regarded as valid as part of an over-all scheme relating to unfair competition beyond the domain of patents and trademarks...
...
Third, s-ss. 7(a) to (d) are constitutionally valid insofar as they merely round out the trademark scheme of the Act, because this is not an expansion of federal jurisdiction but merely a completion of an otherwise incomplete circle of jurisdiction... [citations and quotations omitted]
Mr. Justice MacGuigan continued at page 325:
In sum, the effect of the MacDonald case, in my opinion, is that s-s. 7(b) is intra vires of the Parliament of Canada, "in so far as it may be said to round out regulatory schemes prescribed by Parliament in the exercise of its legislative power in relation to patents, copyrights, trade-marks and trade-names".
Finally on this aspect of the matter before the Court, Mr. Justice MacGuigan concluded at page 328:
In s-s. 7(b), Parliament has chosen to protect the goodwill associated with trade marks. In this way, as Chief Justice Laskin put it, it "rounds out" the statutory scheme of protection of all trade marks. As such, the civil remedy which it provides in conjunction with s. 53 is "genuinely and bona fide integral with the over-all plan of supervision": ... . It has, in sum, a rational functional connection to the kind of trade marks scheme Parliament envisaged, in which even unregistered marks would be protected from harmful misrepresentations.
In my view, s-s. 7(b) is clearly within federal constitutional jurisdiction under s-s. 91(2) of the Constitution Act, 1867. [citation omitted]
[42] In Ital-Press Ltd.