1429539 Ontario Limited v. Café Mirage Inc.

1429539 Ontario Limited v. Café Mirage Inc.
Court (s) Database
Federal Court Decisions
Date
2011-11-09
Neutral citation
2011 FC 1290
File numbers
T-82-05
Decision Content
Date: 20111109
Docket: T-82-05
Citation: 2011 FC 1290
Ottawa, Ontario, November 9, 2011
PRESENT: The Honourable Mr. Justice Mandamin
BETWEEN:
1429539 ONTARIO LIMITED
Plaintiff
and
CAFÉ MIRAGE INC., BDD SOLUTIONS INC.,
MICHAEL BACHOUR, AND AMY SALAM
Defendants
REASONS FOR JUDGMENT AND JUDGMENT
I. Introduction
[1] The Plaintiff is a business corporation that franchises a restaurant concept named ‘The Symposium Café’. The principals of the Plaintiff are two brothers, Mr. William Argiropoulos and Mr. Terry Argiropoulos, who developed the Symposium Café concept. The Plaintiff holds the registered trade-mark ‘The Symposium Café’ along with other trade-marks related to the concept. By 2003, the Symposium Café had expanded to five restaurants in southern Ontario, with two in Toronto, before encountering financial difficulties following the economic downturn after September 11, 2001.
[2] As a result of the Symposium Café financial difficulties, a creditor, Mr. Jim Kotsos, seized four of the Symposium Cafés for non-payment on a promissory note. The ensuing litigation was resolved by a settlement entered into between the Symposium Café Group and Mr. Kotsos. Under the terms of the Minutes of Settlement, the assets of the Kennedy Symposium Café and the Sheppard Symposium Café were transferred to Mr. Kotsos who was entitled to sell the Sheppard and Kennedy Cafés within or outside the Symposium Café franchise system. Mr. Kotsos operated the Sheppard and Kennedy Cafés during the period of litigation and shortly after the settlement sold the assets of the two restaurants to the Defendant BDD Solutions Inc. on an “as is” basis.
[3] The Plaintiff proposed that the new owner, BDD Solutions Inc. and its principals, Mr. Michael Bachour and Ms. Amy Salam, join the Symposium Café franchise system. They declined. They operated the Sheppard and Kennedy restaurants under the name of Café Mirage while retaining the appearance, trade dress, trade-marks and menus of the Symposium Café.
[4] The Plaintiff commenced this lawsuit suing for infringement of its trade-marks, infringement of copyright of the Symposium Café menus, injunctive relief against the Defendants, damages, and costs.
[5] I conclude that the Plaintiff is entitled to judgment for infringement of its trade-marks and copyright, injunctive relief with respect to infringement and damages for infringement of its trade-marks and copyright. The Plaintiff did not prove the Defendants’ conduct warrants punitive damages. Finally, I dismiss the claim against the Defendant Amy Salam.
II. Background
Symposium Café Group
[6] The Argiropoulos brothers began developing their restaurant concept in 1996. At the time they operated several deli restaurants under a company called Biltermar Restaurants Limited (Biltermar). As part of that venture they started a new restaurant named the Plantation Coffee and Tea Company
[7] In September, 1996, Biltermar filed trade-mark applications for ‘Plantation Coffee and Tea Company Design’ and ‘Plantation Coffee and Tea Company’. When Biltermar was sold in 2000, the Argiropoulos brothers separated the Plantation Coffee and Tea Company venture from Biltermar. Later, they renamed the Plantation Coffee and Tea Company as The Symposium Café and operated under both names during the transition.
[8] This new restaurant venture utilized the “School of Athens” fresco by the renaissance artist Raphael. The Symposium Café prominently portrayed a School of Athens fresco as a mural set in an antiqued marble wall pattern and was promoted as a place where people could meet for food, drink and discussion.
[9] In addition to directly operating subordinate restaurants, the Argiropoulos brothers also franchised their restaurant concept under the Plaintiff and a related subordinate Ontario franchisor corporation. They also created separate business corporations to operate each Symposium Café or hold the restaurant leases.
[10] The Argiropoulos brothers are the controlling officers of the Plaintiff Corporation. They were active in establishing separate corporations for the purposes of franchise distribution, restaurant operations, and holding restaurant leases. They have been involved throughout in the development of the Symposium Café concept and assisting franchisees. For convenient reference, I refer to the Argiropoulos brothers and their companies, including the Plaintiff, collectively as the Symposium Café Group.
[11] In 2000, the Plaintiff applied to trade-mark the ‘Symposium Café Design’ in association with the provision of a restaurant and catering service and promotional wares, coffee cups, t-shirts and the like. Two years later, in 2002, the Plaintiff applied to register the trade-mark, ‘The Symposium Café’, for the same range of restaurant services and wares. In 2005, the Plaintiff also applied to register, as trade-marks, a series of expressions, first use claimed as early as 1999, to complement the Symposium Café concept. These trade-marks include:
Second To None
Passport To Pleasure
East Meets West
Escape The Ordinary
Symmetry For The Senses
To Europe And Back In 15 Minutes
Redefining the Café Experience
I will refer to these phrases as the Symposium Café trade-mark expressions.
[12] The Plaintiff also registered as a trade-mark design a three dimensional trade dress representation of the interior of the Symposium Cafés comprising interior walls and columns having the appearance of being made of antique cracked stone, a prominent reproduction of the School of Athens fresco, a circular mahogany bar consisting of two levels functioning as a display area with the lower level functioning as a counter area, and a circular floor tile pattern extending around the circular bar. This trade dress trade-mark design was filed in 2007 and registered in 2008. First use was claimed as 1999, back when the first Plantation Coffee and Tea Company opened. This trade-marked design was used as the principal trade dress for each of the Symposium Cafés.
[13] The Symposium Café Group also developed a common menu and emphasized delivering the same service and café experience across the Symposium franchise system.
Symposium Café Financial Difficulties
[14] In 2001, the Symposium Café Group was experiencing financial difficulty primarily due to going over-budget on renovations for a new restaurant in Kingston, Ontario. The Symposium Café Group borrowed money from Mr. Kotsos, an electrical contractor who had done work for them. The Symposium Café Group was also indebted to Mr. Kotsos for electrical work at the Kingston restaurant, owing in total approximately $512,000.
[15] On August 13, 2001, 1480045 Ontario Limited (the Kennedy Symposium Café) provided Mr. Kotsos with, among other documentation:
• a blanket general security agreement to Mr. Kotsos
• a term promissory note for $437,000 due on demand with Mr. William Argiropoulos guaranteeing payment to Mr. Kotsos.
The events of September 11, 2001 occurred just weeks after the Symposium Café Group signed the loan agreement with Mr. Kotsos. The Symposium Cafés’ business dropped 50 per cent and the Symposium Café Group missed a payment on the promissory note.
[16] Consequently, Mr. Kotsos seized the Kennedy Symposium Café, the Sheppard Symposium Café, and two other Symposium Cafés operating in London, and Waterloo, Ontario. Litigation ensued.
Transfer of Sheppard and Kennedy Cafés
[17] The four Symposium Café corporations applied to the Ontario Superior Court of Justice for relief from Mr. Kotsos’ seizures. Mr. Kotsos counter-applied adding the Argiropoulos brothers and other parties, both individuals and companies of the Symposium Café Group, as counter-respondents. The Court granted an interim interlocutory order on February 26, 2002 restoring possession of the London and Waterloo Symposium Cafés to the Symposium Café Group and possession of the Sheppard and Kennedy Symposium Cafés to Mr. Kotsos until further order of the Court.
[18] On July 21, 2003, the Symposium Café Group and Mr. Kotsos settled. The settlement confirmed two Symposium Café restaurants, London and Waterloo, were retained by the Symposium Café Group. All of the assets of the Sheppard and Kennedy Symposium Cafés were to be transferred to Mr. Kotsos “free and clear of any encumbrances and governance.” The Minutes of Settlement was filed in the Ontario Superior Court of Justice to conclude that litigation.
[19] The settlement provided that Mr. Kotsos was at liberty to sell the Sheppard and Kennedy Symposium Cafés within or outside the Symposium franchise system. If sold outside the Symposium franchise system, Mr. Kotsos agreed the purchase documentation would contain a covenant on the part of the purchasers to remove the Plantation/Symposium signage.
Sale of Kennedy and Sheppard Cafés
[20] On September 18, 2003, Mr. Kotsos sold the assets of both the Sheppard and Kennedy Symposium Cafés to the BDD Solutions Inc., a corporation incorporated by Mr. Michael Bachour and Ms. Amy Salam. The terms of the Bills of Sale provided that Mr. Kotsos sold BDD Solutions Inc. all rights, title and interests in the corporation and the assets of the corporation. The sale agreement provided that the “purchasers [were] purchasing the assets on an ‘as is, where is’ basis”.
[21] The sales agreement between Mr. Kotsos and BDD Solutions Inc. included a covenant whereby if BDD Solutions Inc. decided not to join as a Symposium Café franchisee, it would remove the Symposium Café signs and the Symposium Café Group may retrieve the signs.
Infringement Claim
[22] The Symposium Café Group invited BDD solutions Inc. to join the Symposium franchise system and continue the Sheppard and Kennedy restaurants as Symposium Café franchises. They sent a proposal letter in December 2003 offering franchise rights for $17,500. The proposal would keep the existing agreements in place giving the Defendants, among other things, the right to use the Symposium Café/Plantation Coffee & Tea Company names in return for payment of the one time franchise fee.
[23] BDD Solutions Inc. did not accept the proposal from the Symposium Group. Instead it adopted Café Mirage as the new name for the Sheppard and Kennedy Cafés using a sign design similar in general appearance to that of the Symposium Café Design.
[24] On January 4, 2004, counsel for the Symposium Café Group requested the removal of all signs, menus and other marketing materials associated with the Symposium Café/Plantation Coffee and Tea Company. On January 7, 2004, counsel for the Defendants responded indicating that they were prepared to remove the signage and that they had no intention of utilizing The Symposium Café name.
[25] The Defendants replaced the Symposium Café design signs, utilizing the sign box frames for their new Café Mirage sign but without returning the plastic inserts to the Symposium Café Group. The two Café Mirages maintained the School of Athens trade dress, and continued the use of the trade-mark names and expressions in various signage, menus, and receipts at both the Sheppard and Kennedy locations until 2008 when the Sheppard Café Mirage was substantially renovated. The Kennedy Café Mirage continued the Symposium Café trade dress appearance.
This Lawsuit
[26] The Symposium Café Group rebounded from its low of three restaurants in 2004 and now has nine franchised Symposium Cafés. The Argiropoulos brothers now focus on managing the franchising operation, assisting new franchisees become established by providing training and support, developing new food menus, and generally promoting the Symposium Cafés.
[27] The Symposium Café Group made repeated efforts to secure the return of their Symposium Café Design signs. The Defendants say they took the signs down but offered no evidence of their return to the Symposium Café Group.
[28] On January 13, 2004, the Symposium Café Group’s counsel served notice that the Defendants would be considered liable for the value of the signs if not returned or damaged, and for infringement of The Symposium Café trade-marked design and logos. Further details of the infringement allegations were served on March 22, 2004. Current counsel for the Symposium Café Group gave notice to the Defendants of the intention to proceed with this lawsuit on December 1, 2004.
[29] The Plaintiff’s Statement of Claim was filed January 17, 2005 and further amended on January 3, 2006. The Plaintiff advanced claims for:
i. Infringement of their trade-marks and passing off,
ii. Infringement of copyright for the Symposium Café menus,
iii. Injunctive relief against the Defendants,
iv. Damages for infringement of trade-marks,
v. Statutory damages for infringement of copyright,
vi. Return of the Symposium signs or damages in lieu thereof,
vi. Punitive damages, and
vii. Costs.
[30] The Defendants filed an Amended Statement of Defence admitting they do not have a franchise licensing agreement with the Plaintiff but otherwise denying all allegations and claims in the Amended Statement of Claim
III. Issues
[31] The issues in this trial relate to infringement of trade-mark and copyright. The substantive issues are:
1. Did the Defendants acquire the right to use the Plaintiff’s trade-marks by purchasing the assets of the Sheppard and Kennedy Symposium Cafés? If not, did they infringe the Plaintiff’s trademarks and pass off their restaurants as associated with the Symposium Café franchise without license to do so?
2. Does the Plaintiff have copyright in The Symposium Café menus? If so, did the Defendants commit either secondary or primary infringement of the menu copyright?
3. Is the Plaintiff entitled to return of The Symposium Café signs or damages in lieu of?
4. Did the Plaintiff prove the individual Defendants liable?
IV. Analysis
Plaintiff’s Evidence
[32] The witnesses for the Plaintiff were: Mr. William Argiropoulos, the Vice-President of Finance and Development of the Plaintiff, Ms. Darlene George and Mr. John Palumbo, both Symposium Café franchisees, Ms. Valentina B. Potter and Mr. Vittorio S. R. Scicchitano of Monarch Protection Services which was hired to report on the appearance and operation of the Sheppard and Kennedy Cafés, and Ms. Mindy Fleming, Operations Manager of Sensor Quality Management which conducted a survey exercise.
[33] Mr. Argiropoulos was a credible witness. He spoke in great detail about how he and his brother developed the Symposium Café concept and chronicled the development of what is now a successful franchise enterprise. His evidence on the development of the Symposium Café concept was not seriously challenged.
[34] A significant part of Mr. Argiropoulos’ testimony concerned the development of the Symposium Café concept. He explained that their intention was to create an ambiance where people could gather to meet, eat and have discourse on subjects of interest. The School of Athens artwork captured that ambiance and they built the Symposium Café concept around the prominent display of a large mural of that fresco. To compliment the artwork, they had the walls antiqued in a cracked marble fashion. They added the circular display counter surrounded by a circular tile pattern. This combination was first used in 1999 in the Plantation Coffee and Tea Company and replicated in the later Symposium Cafés. This trade dress was trade-marked as a trade dress design in 2008 for restaurant services.
[35] Mr. Argiropoulos emphasized that the Symposium Café trade dress made their restaurants unique and differentiated Symposium Café from other franchise restaurants that have restaurant interior décor similar to one another.
[36] From time to time Mr. Argiropoulos’ testimony did stray into hearsay and opinion evidence, much of which was not determinative. I have not considered that portion of his testimony. In particular, I have not considered his testimony related to information obtained from the internet.
[37] Ms. George’s testimony was straightforward and I have no difficulty accepting her testimony. She was a Symposium Café employee who became an independent owner of two Symposium Café franchises.
[38] Mr. Palumbo was also a credible witness. He was a prospective Symposium Café franchise customer who backed away after seeing the nearby Kennedy Café Mirage. He later took up a Symposium Café franchise in another location.
[39] The testimony of Ms. Potter and Mr. Scicchitano of Monarch Protection Services was not seriously disputed. They were investigators doing their work. I accept the evidence of these investigators about the appearance of the Sheppard and Kennedy Cafés.
[40] Ms. Fleming testified about the results of a customer survey. The Defendants challenged the value of this survey. I agree that the survey had been insufficiently grounded and I do not give that evidence any weight.
Defendants’ Witnesses
[41] The witnesses for the Defendants were Mr. Michael Bachour, President and Director of BDD Solutions Inc. and Café Mirage Inc., Mr. Jim Kotsos, and Mr. Pele Dagher, an associate of Mr. Bachour who is involved in the management of the Café Mirage restaurants.
[42] Mr. Bachour was an indifferent witness. His evidence about involvement in the restaurant business was nowhere near as extensive as that given by Mr. Argiropoulos. Where his evidence directly differs from Mr. Argiropoulos, I prefer Mr. Argiropoulos’ evidence.
[43] Mr. Kotsos’ testimony reflected the acrimony of his previous litigation with the Argiropoulos brothers and Symposium Café Group. He is a direct and blunt spoken businessman. Notwithstanding his animosity towards the Argiropoulos brothers, I see no reason to not accept the main of his testimony. Where I do not relates to his legal interpretation of the settlement and sale documents which I will address later.
[44] Mr. Dagher’s testimony is credible but does not add much to the narrative. He was involved with and managed the Café Mirage operations after the purchase of Sheppard and Kennedy Cafés from Mr. Kotsos.
Documentary Evidence
[45] Three legal documents are of relevance. The first is the Minutes of Settlement between the Symposium Café Group and Mr. Kotsos signed on the 21st of July 2003 and filed with the Ontario Superior Court of Justice. The remaining two are Bills of Sale for the sale and purchase of the assets of the Sheppard and Kennedy Symposium Cafés by Mr. Kotsos to BDD Solutions Inc., the first being the Bill of Sale by 1499675 Ontario Limited and the second being by Mr. Kotsos in his capacity as receiver of the assets of 1480045 Ontario Limited.
[46] The Minutes of Settlement provided:
13. The Franchisor and the Counter Respondents agree that Kotsos is at liberty to sell the Sheppard and Kennedy Cafés or either of them within or outside the Symposium Franchise System.
14. The Franchisor and the Counter Respondents agree that should Kotsos sell the Kennedy or Sheppard Café to a purchaser outside the Symposium Franchise System, then Kotsos agrees that the purchase documentation shall contain a covenant on the part of the purchaser to remove the Plantation or Symposium signage at the location within 90 days of closing. If the Franchisor wants the signage, it may retrieve it from the purchaser.
[47] The Bill of Sale for the assets of the Sheppard Symposium Café reads:
1. The Vender hereby grants, bargains, sells, assigns, transfers and sets over unto the Purchaser all of its rights, title and interest, if any, in and to the assets …
2. The Purchaser acknowledges by its acceptance of this indenture that:
(ii) the Purchaser is purchasing the Assets on an “as is, where is” basis; …
3. Nothing in this Indenture shall be construed as an attempt to assign any contractual rights forming part of the Assets that are not assignable in whole or in part with the consent of the other party to such contract, unless such consent has been given of the assignment is otherwise lawful.
4. The Vendor covenants that it has the right to convey to the Purchaser all of its rights, title and interest, if any, in and to the Assets.
…
11. There is no representation, warranty, collateral agreement or condition affecting this Indenture or the transaction provided for herein other than as expressed herein.
The Bill of Sale for the Kennedy Symposium Café reads much the same.
[48] Both the Plaintiff and Defendants submitted other documents in support of their respective positions. I consider two sets of documents to be of noteworthy significance.
[49] The first are the menus of both The Symposium Café and the Café Mirage as they are directly relevant to the issue of copyright infringement. The second are the inspection reports of the Monarch Protection Services investigators which provide evidence on the appearance of the Sheppard and Kennedy Cafés.
Trade-mark Infringement
[50] The Supreme Court of Canada has recently had occasion to discuss the nature of trade-marks in Mattel U.S.A. Inc. v 3894207 Canada Inc., 2006 SCC 22, [2006] 1 SCR 772. At paragraph 2, Justice Binnie stated:
[t]he legal purpose of trade-marks continues (in terms of s. 2 of the Trade-marks Act, R.S.C. 1985, c. T-13) to be their use by the owner “to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others”. It is a guarantee of origin and inferentially, an assurance to the consumer that the quality will be what he or she has come to associate with a particular trade-mark (as in the case of the mythical “Maytag” repairman). It is, in that sense, consumer protection legislation.
[51] It is with this in mind that I consider the issue of trade-mark infringement in this case.
1. Did the Defendants acquire the right to use the Plaintiff’s trade-marks by purchasing the Sheppard and Kennedy Restaurants? If not, did they infringe the Plaintiff’s trade-mark and pass off their restaurants as associated with the Symposium Café franchise without license to do so?
[52] The Plaintiff submits that since 1996, the Symposium Café Group has developed its unique franchise system which uses names, expressions and trade dress design protected by trade-mark registration and menus protected by copyright. It submits that while the Defendants chose not to operate within the Symposium franchise system, they have continued to use the Symposium Café trade dress, trade-marks and menus in their Kennedy and Sheppard Cafés and, after 2008, have continued to do so with the Kennedy Café operation.
[53] The Plaintiff contends that the Defendants infringed upon its registered trade-marks by using its trade-marks in the Café Mirage signage and notices. The Plaintiff submits the Defendants are liable for trade-mark infringement and passing off contrary to s. 7 of the Trade-marks Act, RSC 1985, c T-13. The Plaintiff specifically claims infringement under sections 7, 19, 20 and 22 of the Trade-marks Act.
Statutory Provisions
[54] The Federal Court’s jurisdiction for trade-mark infringement is embodied in section 7 of the Trade-marks Act. Of relevance are subsections 7(b) and 7(c) which deal with confusion, and passing-off. The relevant provisions read:
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;
(c) pass off other wares or services as and for those ordered or requested;
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;
c) faire passer d’autres marchandises ou services pour ceux qui sont commandés ou demandés;
[55] In order to determine whether trade-marks or trade-names are confusing, subsection 6(5) must be examined. This provision provides that:
6. (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
(a) the inherent distinctiveness of the trademarks or trade-names and the extent to which they have become known;
(b) the length of time the 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.
6. (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) 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.
[56] Section 20(1) provides when infringement of a trade-mark is deemed to have occurred:
20. (1) The right of the owner of a registered trade-mark to its exclusive use shall be deemed to be infringed by a person not entitled to its use under this Act who sells, distributes or advertises wares or services in association with a confusing trade-mark or trade-name, but
no registration of a trade-mark prevents a person from making
(a) any bona fide use of his personal name as a trade-name, or
(b) any bona fide use, other than as a trademark,
(i) of the geographical name of his place of business, or
(ii) of any accurate description of the character or quality of his wares or services, in such a manner as is not likely to have the effect of depreciating the value of the goodwill attaching to the trade-mark.
20. (1) Le droit du propriétaire d’une marque de commerce déposée à l’emploi exclusif de cette dernière est réputé être violé par une personne non admise à l’employer selon la présente loi et qui vend, distribue ou annonce des marchandises ou services en liaison avec une marque de commerce ou un nom commercial créant de la confusion. Toutefois, aucun enregistrement d’une marque de commerce ne peut empêcher une personne :
a) d’utiliser de bonne foi son nom personnel comme nom commercial;
b) d’employer de bonne foi, autrement qu’à titre de marque de commerce :
(i) soit le nom géographique de son siège d’affaires,
(ii) soit toute description exacte du genre ou de la qualité de ses marchandises ou services, d’une manière non susceptible d’entraîner la diminution de la valeur de l’achalandage attaché
à la marque de commerce.
[57] No issue arises about the Plaintiff being the registered holder of trade-marks with respect to restaurant services and related wares. These trade-marks are:
Symposium Café Design (Filed 2000-04-18, Registered 2003-08-29)
The Symposium Café (Filed 2002-05-05, Registered 2005-01-18)
Second To None (Filed 2005-04-29, Registered 2007-03-07)
Passport To Pleasure (Filed 2005-04-29, Registered 2006-03-08)
East Meets West (Filed 2005-04-29, Registered 2006-05-06)
Escape The Ordinary (Filed 2005-04-29, Registered 2006-03-06)
Symmetry For The Senses (Filed 2005-04-29, Registered 2006-12-01)
To Europe And Back In 15 Minutes (Filed 2005-04-29, Registered 2006-03-07)
Redefining The Cafe Experience (Filed 2005-04-29, Registered 2007-12-21)
Symposium Café Trade Dress Design (Filed 2007-12-07, Registered 2008-05-21)
[58] The Plaintiff claims first use of its registered trade-marks going back as early as 1999 for the Symposium Café Trade Dress Design and the expressions, and 2000 for the Symposium Café Design and The Symposium Café name. The above dates are reflected in the Trade-Mark data and the certificates of registration. The Defendants have not challenged this evidence.
Acquiescence
[59] The Defendants contend that even though the Plaintiff is not a signatory, it was involved in the Minutes of Settlement and to suggest otherwise is disingenuous. The Defendants say this is especially so given that the Plaintiff is also trying to assert rights under the covenant in the Minutes of Settlement for the return of the Symposium Café design signs. The Defendants submit the Plaintiff is bound by the Minutes of Settlement agreed to by the Argiropoulos brothers and the Symposium companies in which all assets of the Sheppard and Kennedy Symposium Cafés were transferred.
[60] The Defendants submit they are entitled to raise the defence of acquiescence because the Plaintiff has consented to the use of the trade-marks by the Defendants. They rely on Boston Pizza International Inc. v Boston Market Corp., 2003 FC 892, [2003] 238 FTR 1, where Justice Tremblay-Lamer stated:
[42] A defence of acquiescence may be successful if the expunging party (the plaintiff) consents to the use and registration of the trade-mark or leads the defendant to believe that the defendant's use of the mark is proper to the defendant's prejudice.
[43] In White Consolidated Industries, Inc. v. Beam of Canada Inc. (1991), 47 F.T.R. 172, Teitelbaum J. adopted at page 186 the following definition of acquiescence from Archbold v. Scully (1861), 9 H.L.C. 360:
If a party, who could object, lies by and knowingly permits another to incur an expense in doing an act under the belief that it would not be objected to, and so a kind of permission may be said to be given to another to alter his condition, he may be said to acquiesce [...]
[61] I agree with the Defendants’ submission that the Plaintiff is bound by the terms of the Minutes of Settlement even if not specifically listed as a party. The Argiropoulos brothers are the principals and controlling directors of the Plaintiff. They established a hierarchy of companies which included 1424930 Ontario Limited, an Ontario corporation that functioned as the franchising company for Ontario restaurants, 966778 Ontario Inc. (the Sheppard Café), and 1480045 Ontario Limited (the Kennedy Café), companies which acquired the right to use of the Plaintiff’s trade-marks.
[62] In my view, the parties to the settlement would have understood that use of the trade-marks in question would be available should the subsequent purchaser desire to continue within the Symposium franchise system. The Argiropoulos brothers agreed and they have the complete authority to direct the Plaintiff, the holder of the trade-marks, to comply. They cannot subsequently say, without express language in the Minutes of Settlement, the Plaintiff never consented to subsequent use of the trade-marks by a purchaser who opted to continue within the Symposium franchise system.
[63] I conclude that in the circumstances of this settlement, the agreement of the Argiropoulos brothers constitutes consent on behalf of the Plaintiff. However, I must consider what rights were actually transferred by the Minutes of Settlement.
[64] The Defendants say the Plaintiff is estopped from claiming any rights whatsoever with respect to any trade-marks as those rights have been effectively waived by the Plaintiff or others acting on behalf of the Plaintiff. The Defendants say that the Minutes of Settlement transferred all the assets of the Sheppard Café and the Kennedy Café to Mr. Kotsos who was free to sell those assets.
[65] I have no hesitation in concluding that Mr. Kotsos could sell the Sheppard and Kennedy Cafés within the Symposium franchise system. The Minutes of Settlement expressly contemplate the Sheppard and Kennedy Cafés as being sold “within or outside the Symposium Café Franchise System”. The fact that the Argiropoulos brothers sought to persuade the Defendants to continue as part of the franchise system after BDD Solutions Inc. purchased the restaurants confirms my conclusion. In my view, Mr. Kotsos was entitled, by the Minutes of Settlement, to transfer that right to BDD Solutions Inc.
[66] The Sheppard and Kennedy Café assets did not, however, include the unlimited right to use the trade-marks outside of the Symposium franchise system. Mr. Kotsos says he had the right to do so because he assumed all of the assets of the Sheppard and Kennedy Cafés under the Minutes of Settlement. Mr. Kotsos is offering his interpretation of the Minutes of Settlement. I do not accept his interpretation of the settlement agreement.
[67] The Defendants assert BDD Solutions Inc. bought all of the assets that Mr. Kotsos possessed, including the trade-marks, since the agreements of purchase and sale specifically refer to and give value to the “Goodwill and trade name” at $10,000 out of a total of $160,000 for the Sheppard Café and $49,000 out of a total of $328,000 for the Kennedy Café.
[68] I note that the consequent Bills of Sale merely set out the total sale prices without any breakdown or separate reference to goodwill and trade names. Moreover, the Bills of Sale restrict the assets transferred to those held by Mr. Kotsos and are sold “where is, as is”. They expressly further limit the assets transferred:
2. Nothing in this Indenture shall be construed as an attempt to assign any contractual rights forming part of the Assets that are not assignable in whole or in part with the consent of the other party to such contract, unless such consent has been given of the assignment is otherwise lawful.
…
11. There is no representation, warranty, collateral agreement or condition affecting this Indenture or the transaction provided for herein other than as expressed herein.
[69] The evidence of Mr. Bachour is that the Defendants decided not to operate within the Symposium franchise system.
[70] The Symposium Café Group held registered trade-marks for the Symposium Café Design and The Symposium Café. The Argiropoulos brothers were developing the Symposium franchise system. Their plans and activities all point to an intention to maintain and develop the Symposium Café concept as their restaurant franchise concept. They personally borrowed money to defend their control of the Symposium Cafés in the litigation with Mr. Kotsos. All of this is contrary to the suggestion that they would give up rights to the central elements of their concept notwithstanding the financial and business difficulties they were contending with.
[71] Nothing in the Minutes of Settlement confirms Mr. Kotsos interpretation. I find that the Minutes of Settlement itself supports the interpretation that what was transferred was a right to use the Symposium Café trade-marks within the Symposium franchise system. This was acknowledged by Mr. Kotsos himself when he agreed that any sale and purchase documentation would contain a covenant on the part of the purchaser to remove the Plantation/Symposium signage at the Sheppard and Kennedy Café locations within 90 days of closing should the purchaser choose not to continue as Symposium Café franchises.
[72] I also consider the Defendants were on notice that the Plaintiff no longer consented to the use of its registered trade-marks as of January 2004 when the Plaintiffs demanded the return of the Symposium Café Design signs. In December of that year, the Plaintiff’s solicitor gave notice of its intention to commence a lawsuit for the Defendants’ infringement of the Symposium Café trade-marks and the Defendants’ failure to return the signs. I find the Defendants were, as of January 2004, no longer entitled to use the trade-marks without the further consent of the registered trade-mark holder, the Plaintiff, which was never given.
Confusion
[73] Section 7(b) of the Trade-marks Act provides that no person shall direct public attention to his services as to cause or be likely to cause confusion between his services and the services of another. Confusion is defined in section 6 of the Act which sets out the required approach to a confusion analysis. Section 6(5) requires that all surrounding circumstances must be considered including:
(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.
[74] It is therefore necessary to apply the criteria in section 6(5) to the present case.
(a) Inherent distinctiveness of the trade-marks and length of time they have been known
[75] The Symposium trade-marks involve the prominent featuring of the School of Athens coupled with antiqued marble wall patterns, a circular display counter and tiles, with trade-mark names and expressions associated with restaurant services. While the individual components are not particularly distinctive (the School of Athens, for instance, is a well known public work of art), the trade dress combination in conjunction with a restaurant satisfies this requirement for distinctiveness. Accompanying this imagery and décor are the trade-mark expressions used in association with the restaurant food, décor and service experience. The Symposium Cafés established in the Toronto area, London and Waterloo, Ontario all feature the same distinctive trade dress.
(b) Length of time the competing trade-marks have been in use
[76] The Plaintiff’s first use of the trade-marks goes back to 1999 while the Defendants’ usage of the Symposium trade dress is more recent, commencing in a competing mode in 2004.
(c) Nature of the Services
[77] Both parties operate restaurants in the Toronto area.
(d) Nature of the Trade
[78] Both parties provide the same food and service targeting the same clientele, customers who are going to a restaurant for a sit down meal.
(e) Degree of Resemblance in Appearance
[79] The similarity is to be considered in viewing the trade-marks as a whole. It is to be viewed as if by an average person with an imperfect recollection of specific detail who forms an overall impression: Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 SCR 824 at para 20. The Monarch Protection Services investigators reported on the similarities of the Sheppard and Kennedy Cafés with the Symposium Café. The Defendants had kept the prominent display of the School of Athens artwork, antiqued wall pattern, circular display counter and floor tiles that are part of the Symposium Café trade dress. The Defendants also continued the use of the trade-mark expressions in signage and in menus. Significantly, the Defendants continued the use of the very large external School of Athens mural with the Symposium Café trade-marked expression ‘Redefining the Café Experience’ on the outside of the Kennedy Café Mirage.
[80] The Defendants submit that there is no evidence adduced by the Plaintiff to show confusion between Café Mirage and the Symposium Café. The Defendants submit that the testimony of Ms. George and Mr. Palumbo should be disregarded because they are closely related to the Plaintiff. They cite Phillip Morris Products S.A. v Marlboro Canada Ltd., 2010 FC 1099, [2010] 90 CPR (4th) 1 at paragraph 263 , where the Court stated:
The same is true for the evidence provided by the Defendant’s sales representatives, although for a host of other reasons. First of all, they are all employees of a party to this action, and rely on good relationships with their employer for their livelihood. This employer-employee relationship of subordination undermines the reliability of those testimonies. Furthermore, they were all relatively inexperienced and they made sweeping statements that did no