Travel Leaders Group, LLC v. 2042923 Ontario Inc. (Travel Leaders)

Travel Leaders Group, LLC v. 2042923 Ontario Inc. (Travel Leaders)
Court (s) Database
Federal Court Decisions
Date
2023-03-08
Neutral citation
2023 FC 319
File numbers
T-202-17
Decision Content
Date: 20230308
Docket: T-202-17
Citation: 2023 FC 319
Ottawa, Ontario, March 8, 2023
PRESENT: Madam Justice Walker
BETWEEN:
TRAVEL LEADERS GROUP, LLC
Plaintiff/Defendant by Counterclaim
and
2042923 ONTARIO INC.
D.B.A. TRAVEL LEADERS
Defendant/Plaintiff by Counterclaim
JUDGMENT AND REASONS
Table of Contents
I. Overview 3
II. The Parties 3
III. Background and Timeline 5
IV. Procedural History 9
V. Witnesses at trial 12
1. TLG’s fact witnesses 12
(a) Stephen McGillivray 12
(b) Mario Iafrate 13
(c) Daryl Somes 13
(d) Gul Mohammed 13
2. TLG’s expert witness 14
3. Ontario Inc.’s fact witness 15
VI. Issues 15
VII. Relevant Provisions 16
VIII. Analysis 16
1. Is the Registration invalid? 16
(a) Paragraph 18(1)(c): Has the Registration been abandoned? 18
(b) Paragraph 18(1)(a): Does the Registration contain a material misstatement as to the date of first use? 33
(c) Paragraph 18(1)(e): Was the Registration registered in bad faith? 37
2. Has TLG infringed the Registration? 47
(a) Section 19: Infringement of the exclusive right to use a registered trademark 48
(b) Paragraph 20(1)(a): Infringement via use of a confusing trademark 51
(c) Subsection 22(1): Depreciation of Ontario Inc.’s goodwill by TLG 53
3. Passing off by TLG: Paragraph 7(b) 58
4. Passing off by Ontario Inc.: Paragraph 7(b) 62
5. Remedies 62
(a) Expungement 62
(b) Injunctive relief 63
(c) Nominal Damages 63
(d) Punitive Damages 64
6. Costs 65
JUDGMENT IN T‑202‑17 67
Schedule “A” 70
I.
Overview
[1] The central issue in this proceeding is the validity of a Canadian trademark registration, namely registration number TMA790523 (the Registration) for the trademark TRAVEL LEADERS. The Registration is owned by the Defendant/Plaintiff by Counterclaim, 2042923 Ontario Inc. (Ontario Inc.).The Plaintiff/Defendant by Counterclaim, Travel Leaders Group, LLC (TLG) asserts that the Registration is invalid on the basis of material misstatement as to the date of first use, abandonment and bad faith (paragraphs 18(1)(a), (c) and (e) respectively of the Trademarks Act, RSC 1985, c T-13 (the Act)). Ontario Inc. denies TLG’s claims of invalidity. In turn, Ontario Inc. asserts that TLG has infringed its exclusive rights as the owner of the TRAVEL LEADERS trademark, depreciated the value of the goodwill associated with the trademark, and engaged in passing off contrary to paragraph 7(b) of the Act.
[2] For the reasons that follow, I have found that Ontario Inc. abandoned the registered TRAVEL LEADERS trademark as of February 14, 2017. As a result, the Registration will be expunged from the Register. I have also found that Ontario Inc. has failed to establish its claims against TLG pursuant to each of section 19, subsections 20(1) and 22(1) and paragraph 7(b) of the Act.
II. The Parties
[3] TLG was incorporated under the laws of Delaware and has its principal place of business in Plymouth, Minnesota. It is one of three business units of Internova Travel Group (Internova). TLG itself carries on business through a number of divisions, one of which is Travel Leaders Network LLC. The Canadian operations of Travel Leaders Network LLC are conducted via TL Network Canada Inc. (TL Network Canada).
[4] The TL Network business has two components: member travel agencies who sell travel services directly to consumers and preferred travel supply partners (e.g., hotels, cruise lines, tour operators, rental car companies and airlines). TLG also operates franchised travel agencies in the United States under the name TRAVEL LEADERS but has no franchises in Canada.
[5] In exchange for membership fees, TLG leverages the buying power of its member travel agencies to negotiate preferential business terms with preferred travel suppliers. For example, preferred suppliers provide TLG’s member agencies with higher commissions compared to those paid to non‑member agencies. TLG also assists member agencies in building their businesses by providing software booking solutions, education and certifications, networking events and other business services. TLG’s primary lines of revenue are derived from its preferred suppliers who pay TLG (1) a small percentage on sales to member agencies; and (2) fees for TLG to market its services to member agencies.
[6] Ontario Inc. was incorporated on March 16, 2004 and has two equal shareholders: Mr. Amin Saleh, the sole director and principal of Ontario Inc. and its sole witness in this proceeding, and Mrs. Salehmohamed, Mr. Saleh’s spouse. Mrs. Salehmohamed is not, and has not been, an employee of Ontario Inc. She works full‑time for a well‑established and unrelated organization.
[7] On or around May 10, 2004, Ontario Inc. acquired a stand‑alone travel agency, K&S Travel Limited (K&S Travel). Ontario Inc.’s initial clients were the former clients of K&S Travel and Ontario Inc. first operated from the existing K&S Travel premises at 550 Ontario Street South in Milton, Ontario. Subsequently, Ontario Inc. moved to business premises at Suite 203, 400 Bronte St South, again in Milton, Ontario (the Office) from which it offered travel services directly to Canadian consumers.
III. Background and Timeline
[8] The following factual and temporal background is drawn from the parties’ detailed Agreed Statement of Facts, the live and documentary evidence presented at trial and the parties’ read‑ins from discovery. This section is a summary of the evidence to provide context for the dispute between the parties. A detailed review of the relevant evidence is set out in my substantive analysis of the issues in dispute.
[9] Ontario Inc. began operations in 2004 following its acquisition of K&S Travel and initially carried on business under the name K&S Travel from storefront premises. In or around 2006‑2007, Ontario Inc. purchased the Office, a condominium unit of approximately 700 square‑feet on the second floor of a low‑rise building.
[10] Mr. Saleh decided to rebrand Ontario Inc. in late 2004. On November 8, 2004, he performed business name searches for “Travel Ways” and “Travel Leaders” and chose to move forward with “Travel Leaders”. According to Mr. Saleh, he searched online for Travel Leaders but did not find any other businesses using that name in Ontario.
[11] Mr. Saleh obtained an Ontario Master Business Licence under the name Travel Leaders on November 8, 2004 and stated that he registered the domain name “travelleaders.ca” on November 9, 2004. Mr. Saleh testified that he did not consider using a “.com” domain name and did not search “travelleaders.com”. In January 2005, Mr. Saleh applied to update Ontario Inc.’s trade name, TRAVEL LEADERS, with the Travel Industry Council of Ontario (TICO) and the International Air Transport Association (IATA).
[12] Based on publicly filed records in the United States Patent and Trademark Office, a predecessor to TLG, American Leisure Equities Corporation, first adopted the trademark TRAVELEADERS in 2001 and filed for registration on April 19, 2005. The application issued to registration on November 14, 2006.
[13] The original US Registration was amended to two words, TRAVEL LEADERS, on September 11, 2008. TLG and its predecessors have used the trade name and trademark TRAVEL LEADERS in the United States since 2008.
[14] TLG filed for registration of TRAVEL LEADERS in Canada based on proposed use in Canada on August 18, 2008 (Canadian Application No. 1,407,622) (the Application). The Application was advertised on June 10, 2009.
[15] Ontario Inc. filed a Statement of Opposition in respect of the Application on November 24, 2009 and TLG did not file a counterstatement. In an attempt to resolve the Opposition, TLG offered to purchase the TRAVEL LEADERS trademark for $4,000 plus a license back to Ontario Inc., failing which TLG would give up the trademark and proceed with a different trademark in Canada. Ontario Inc. rejected the offer.
[16] The Registrar of Trademarks deemed the Application abandoned on March 29, 2010.
[17] Ontario Inc. filed an application to register the TRAVEL LEADERS trademark on May 4, 2010, claiming use in Canada since at least as early as March 22, 2005.
[18] Ontario Inc.’s application was registered without opposition on February 14, 2011 (Canadian trademark registration number TMA790523 (the Registration)).
[19] In mid‑2011, TLG offered to purchase the Registration from Ontario Inc. for $25,000, plus the right to operate as a TLG member agency in Canada. In the alternative, TLG offered to purchase the business at its fair market value.
[20] Ontario Inc. responded to TLG’s offer with a counteroffer to sell the Registration to TLG for $850 million. TLG replied that the response was “disappointing and amateur”.
[21] In November/December 2015, Ontario Inc. paid for and posted an advertisement (the Advertisement) for sale of the Registration on www.ustrademarkexchange.com for $80 million (US). Mr. Saleh drafted the Advertisement and paid a one‑year listing fee. On December 7, 2016, Mr. Saleh wrote to the listing exchange to request removal of the Advertisement from the website but the Advertisement remained online until 2019. Following repeated questioning by TLG on examination for discovery, , Mr. Saleh wrote to the listing exchange on May 10, 2019 again requesting its removal.
[22] The Advertisement included the statements “UNBELIEVABLE OPPORTUNITY,” “Travel Leaders Group can’t bring their flagship Travel Leaders franchises into Canada without buying or licensing this trademark” and “Travel Leaders Group states that they currently encompass over 30% of all travel agencies in North America and have gross sales of approximately $20 Billion USD”. The Advertisement provided links to two news articles that discussed the value of TLG’s business.
[23] As of February 14, 2017, the date of issuance of the Statement of Claim, TLG owned 11 registered trademarks and 13 pending trademark applications in Canada (the TLG Marks) based on publicly filed records in the Canadian Intellectual Property Office. The TLG Marks included pending applications for TRAVEL LEADERS NETWORK, TL NETWORK and TL NETWORK & Design.
[24] Ontario Inc. opposed both TL NETWORK applications.
[25] On August 16, 2021, the Trademarks Opposition Board (TMOB) issued one decision allowing registration of the TL NETWORK word mark (Canadian registration TMA1114893). The TMOB dismissed Ontario Inc.’s opposition to the TL NETWORK mark, finding that TL NETWORK is not confusing with TRAVEL LEADERS. Ontario Inc. did not appeal the TMOB’s decision.
IV. Procedural History
[26] TLG filed its Statement of Claim in this proceeding on February 14, 2017, asserting that the Registration is invalid and should be expunged pursuant to subsection 57(1) of the Act. TLG claimed that Ontario Inc. had not used the TRAVEL LEADERS trademark as of the date of first use claimed and had abandoned the mark as of February 14, 2017. TLG also claimed that the Registration is invalid pursuant to paragraph 18(1)(b) of the Act for lack of distinctiveness but did not ultimately pursue the 18(1)(b) claim.
[27] Ontario Inc. filed its Statement of Defence on March 31, 2017.
[28] The action moved forward as a specially managed proceeding and the typical steps ensued, including examinations for discovery. Mr. Saleh was first examined for discovery on November 28 and 29, 2017. An Order of the Case Management Judge was issued on March 23, 2018 to compel Ontario Inc. to answer questions refused and undertaken at the November 2017 examinations for discovery.
[29] Mr. Saleh was also examined on June 13, 2018, August 7, 2019, November 7, 2019 and February 20, 2020.
[30] In December 2018, Ontario Inc. commenced a separate action against TLG (T‑2153‑18) that was consolidated with this proceeding by Order dated February 11, 2019. The claims in T‑2153‑18 continued as counterclaims in the consolidated proceeding.
[31] Ontario Inc. filed an Amended Statement of Defence and Counterclaim on February 28, 2019.
[32] On May 8, 2019, TLG filed an Amended Statement of Claim relying on new paragraph 18(1)(e) of the Act to add a claim that the Registration is invalid because it was filed in bad faith.
[33] On June 5, 2019, Ontario Inc. filed a Further Amended Statement of Defence and Counterclaim, claiming that TLG had infringed its registered trademark TRAVEL LEADERS thereby depreciating the goodwill associated with the trademark.
[34] TLG filed its Reply and Defence to Counterclaim on July 15, 2019.
[35] The parties participated in mediation on March 13, 2020 but did not arrive at an agreed resolution of the consolidated action.
[36] Following the suspension of Court proceedings in March of 2020 due to the COVID‑19 pandemic, trial preparations resumed in late 2020.
[37] The trial took place in person in Toronto from September 12 to September 22, 2022. Both parties had full opportunity to present their witnesses and documentary evidence to the Court and to provide oral and written closing submissions. The trial addressed all issues in dispute between the parties, with only costs submissions to be received by the Court once this judgment has issued.
[38] On September 21, 2022, the penultimate day of the trial, Mr. Saleh requested permission to address the Court concerning his counsel’s conduct of the trial. I issued a direction indicating that counsel for both parties would have the opportunity to make submissions regarding Mr. Saleh’s request prior to closing arguments on September 22, 2022. Early on September 22, 2022, Mr. Saleh withdrew his request and counsel proceeded with closing arguments.
[39] On October 19, 2022, following completion of the trial, Mr. Saleh, on behalf of Ontario Inc., filed a motion requesting (1) leave pursuant to Rule 120 to allow Mr. Saleh to represent Ontario Inc.; and (2) permission to file additional evidence that was available but not filed at trial. As Mr. Saleh had no standing to introduce the relief sought in the second element of the motion and to safeguard the integrity of the trial process, the Court informed the parties that it would consider only the Rule 120 motion.
[40] On November 14, 2022, I dismissed Ontario Inc.’s Rule 120 motion, finding that Ontario Inc. had not satisfied the Court that special circumstances warranted the granting of the motion and the appointment of Mr. Saleh as its representative. As the Rule 120 motion was dismissed, Ontario Inc. could only be represented in this proceeding by a solicitor and the Court did not consider the request for permission to file additional evidence.
[41] On December 7, 2022, Ontario Inc.’s counsel, Mr. Baker, filed a motion requesting an order permitting him to be removed as solicitor of record for Ontario Inc. on the basis of a breakdown of the solicitor‑client relationship. Ontario Inc. indicated that it would not respond to the motion. The Case Management Judge granted Mr. Baker’s motion on December 12, 2022.
V. Witnesses at trial
1. TLG’s fact witnesses
(a) Stephen McGillivray
[42] Mr. Stephen McGillivray is the Chief Marketing Officer of TLG. He is based in Alexandra, Virginia, and has been in the same role since 2010. Mr. McGillivray leads a US‑based marketing team of about 50 people. Their primary responsibility is to support TLG’s member travel agencies by negotiating preferential contracts and pricing with preferred travel service providers. Mr. McGillivray and his team manage TLG’s marketing budget and are responsible for approximately 90% of communications with TL Network members in Canada. The team is assisted in this regard by a TLG colleague based in Toronto.
[43] Mr. McGillivray gave an overview of TLG’s business model and its operations in Canada through TL Network Canada. He testified that TLG has produced logo usage guidelines for its franchisees and member travel agencies in the United States, and distinct guidelines for TL Network member agencies in Canada. Mr. McGillivray explained that TLG’s Canadian member agencies have the right to use the TL NETWORK MEMBER mark to indicate their association with TL Network. They are not permitted to use TRAVEL LEADERS to denote the association. In addition, Canadian TL Network supplier partners are permitted to use the TL NETWORK SUPPLIER PARTNER mark. In contrast, under the US logo usage guidelines, a US supplier would run an advertisement describing itself as a “supplier partner of TRAVEL LEADERS Network”.
(b) Mario Iafrate
[44] Mr. Mario Iafrate is a retired private investigator. He founded Hallmark Investigation Services Inc. (Hallmark) in 1979, specializing in anti‑counterfeiting and trademark infringement retainers. Between 2016 and 2017, Mr. Iafrate conducted five investigations on behalf of TLG to determine whether Ontario Inc. was a viable and operational business. Mr. Iafrate prepared five reports, one documenting each investigation. The reports were entered into evidence at trial and admitted for the truth of their contents.
(c) Daryl Somes
[45] Mr. Daryl Somes is a licenced private investigator and majority owner of Backlit Resource Group Incorporated (Backlit), an investigation agency that specializes in anti‑counterfeiting and IP‑related investigations. Backlit was retained by TLG’s counsel to conduct a series of investigations into Ontario Inc.’s operating status between 2019 and 2022. Mr. Somes acted as case manager for the investigations and reviewed the reports prepared by Backlit’s licensed investigator.
(d) Gul Mohammed
[46] Mr. Gul Mohammed is a licenced private investigator employed by Backlit. On instructions from Mr. Somes, Mr. Mohammed attended Ontario Inc.’s Office on five occasions between 2019 and 2022 to determine whether there was a travel agency operating out of that location. Mr. Mohammed prepared a report detailing each of his five investigations and those reports were entered into evidence at trial and admitted for the truth of their contents.
2. TLG’s expert witness
[47] Mr. Jon Purther is currently the Director of Market Insights for Payments Canada. He was formerly President and Chief Operating Officer of CorbinPartners, a firm providing forensic research and business intelligence primarily for litigation matters. During his tenure at CorbinPartners, Mr. Purther designed and conducted a survey study to measure consumer recognition of a Milton‑based travel agency named “Travel Leaders” (the Survey).
[48] Mr. Purther attested in his November 30, 2018 affidavit that he had read and signed the required certificate agreeing to be bound by the Federal Court’s “Code of Conduct for Expert Witnesses” stipulated in Rule 52.2 of the Federal Courts Rules, SOR/98‑106. He also confirmed during examination in chief that he understood his obligation to provide independent unbiased information to the Court. Ontario Inc. did not object to Mr. Purther’s qualification as an expert witness.
[49] The Court qualified Mr. Purther as an expert in market research, with particular expertise in the design, execution and analysis of research studies and consumer surveys in intellectual property matters.
3. Ontario Inc.’s fact witness
[50] Mr. Saleh was Ontario Inc.’s sole witness at trial. Mr. Saleh is the President and general manager of Ontario Inc. and, as noted above, holds 50% of the outstanding shares of the company. He testified at length in chief and was subject to detailed cross‑examination. Mr. Saleh provided background on Ontario Inc., the conduct of its business since 2004, its adoption, use and registration of the TRAVEL LEADERS mark, and his activities in relation to the business and attempted sale of the registered trademark to TLG and to third parties. Mr. Saleh also described the steps taken in rebranding Ontario Inc. in 2004 and the development and dénouement of its travel agency business since that time.
VI. Issues
[51] The issues before the Court are:
Is the Registration invalid on one or more of the following grounds:
(a) Has the Registration been abandoned?
(b) Does the Registration contain a material misstatement as to the date of first use?
(c) Was the Registration registered in bad faith by Ontario Inc.?
If the Registration is valid, has TLG infringed the Registration:
(a) Is TLG liable for infringement pursuant to section 19 or subsection 20(1) of the Act?
(b) Has TLG depreciated Ontario Inc.’s goodwill in the Registration contrary to subsection 22(1) of the Act?
Has TLG engaged in passing off contrary to paragraph 7(b) of the Act?
Has Ontario Inc. engaged in passing off contrary to paragraph 7(b) of the Act?
What remedies are appropriate in this proceeding?
[52] Ontario Inc. initially argued that TLG’s claim is barred by subsection 17(2) of the Act but did not pursue the issue at trial.
VII. Relevant Provisions
[53] See Schedule “A” attached to this judgment.
VIII. Analysis
1. Is the Registration invalid?
[54] TLG seeks an order of the Court expunging the Registration pursuant to subsection 57(1) of the Act on the basis of invalidity. This request gives rise to two preliminary issues, both of which can be addressed quickly.
[55] First, the Court must be satisfied that TLG has standing to request expungement of the Registration. For ease of reference, subsection 57(1) of the Act provides that:
57(1) The Federal Court has exclusive original jurisdiction on the application of the Registrar or of any person interested, to order that any entry in the register be struck out or amended on the ground that at the date of the application the entry as it appears on the register does not accurately express or define the existing rights of the person appearing to be the registered owner of the trademark.
57(1) La Cour fédérale a une compétence initiale exclusive, sur demande du registraire ou de toute personne intéressée, pour ordonner qu’une inscription dans le registre soit biffée ou modifiée, parce que, à la date de cette demande, l’inscription figurant au registre n’exprime ou ne définit pas exactement les droits existants de la personne paraissant être le propriétaire inscrit de la marque de commerce.
[56] The Registrar and any “person interested” in an entry in the register of trademarks may bring an application under subsection 57(1). Section 2 of the Act defines a “person interested” as including “...any person who is affected or reasonably apprehends that he may be affected by any entry in the register, or by any act or omission or contemplated act or omission under or contrary to this Act...”.
[57] A “person interested” is a de minimus threshold (Beijing Jingdong 360 du E‑commerce Ltd. v Zhang, 2019 FC 1293 at para 11 (Beijing Jingdong); Advanced Purification Engineering Corporation (APEC Water Systems) v iSpring Water Systems, LLC, 2022 FC 388 at para 13 (APEC Water Systems)). The term is to be interpreted broadly and includes a party whose rights may be restricted by a trademark registration or who has a reasonable apprehension of prejudice, or whose business is likely to be hampered by a trademark registration (Apotex Inc. v Registrar of Trademarks, 2010 FC 291 at para 7; TLG Canada Corp v Product Source International LLC., 2014 FC 924 at paras 38‑39; see also Beijing Jingdong at paras 11‑13).
[58] Ontario Inc. does not dispute that TLG is a “person interested” within the meaning of subsection 57(1) of the Act. TLG argues that it is a person interested in the TRAVEL LEADERS trademark as it uses the trademark in other jurisdictions, notably the United States, owns a U.S. registration for the same mark and is the target of an infringement claim by Ontario Inc. I agree. The entry in the trademarks registry of the Registration affects TLG’s legitimate business activities and gives rise to a reasonable apprehension of prejudice on its part.
[59] I am satisfied that TLG is a person interested for purposes of subsection 57(1) of the Act and has standing to bring its request for expungement.
[60] Second, the starting point for my assessment of TLG’s claim that the Registration is invalid is the presumption that trademarks are valid until proven otherwise (APEC Water Systems at para 16; Beyond Restaurant Group LLC v Wang, 2020 FC 514 at para 24 (Beyond Restaurant Group)). The presumption underlines the normal burden of proof borne by an attacking party to present evidence establishing that the trademark at issue is invalid (Bedessee Imports Ltd. v GlaxoSmithKline Consumer Healthcare (UK) IP Limited, 2019 FC 206 at paras 14‑15 (Bedessee FC) (aff’d Bedessee Imports Ltd. v GlaxoSmithKline Consumer Healthcare (UK) IP Limited, 2020 FCA 94) (Bedessee FCA)), citing Cheaptickets and Travel Inc. v Email.ca Inc., 2008 FCA 50 at para 12).
[61] As the party alleging invalidity, TLG bears the onus of proving, on a balance of probabilities, that the Registration for the TRAVEL LEADERS trademark is invalid (Techno‑Pieux Inc. v Techno Piles Inc., 2022 FC 721 at para 172, citing Bedessee FCA at para 18).
(a) Paragraph 18(1)(c): Has the Registration been abandoned?
[62] Paragraph 18(1)(c) of the Act provides that the registration of a trademark is invalid if the trademark has been abandoned. The relevant date for assessing abandonment is the date of the application to expunge (Yiwu Thousand Shores E‑Commerce Co. Ltd. v Lin, 2021 FC 1040 at para 45 (Yiwu Thousand Shores); Bedessee FC at para 43; Cross Canada Auto Body Supply (Windsor) Limited v Hyundai Motor America, 2007 FC 580 at para 10, aff’d Cross‑Canada Auto Body Supply (Windsor) Ltd. v Hyundai Auto Canada, 2008 FCA 98, leave to appeal to Supreme Court of Canada (SCC) denied).
[63] In this proceeding, the relevant date is February 14, 2017, the date TLG filed its Statement of Claim. This date also serves as a marker to assess whether actions taken by Ontario Inc. after February 14, 2017 were attempts to bolster its operations in response to TLG’s abandonment claim or were normal course actions in furtherance of the business.
[64] A finding of abandonment requires (1) non‑use in Canada of the trademark, and (2) an intention to abandon the trademark (Promafil Canada Ltee v Munsingwear Inc, (1992) 44 CPR (3d) 59 (FCA); Milano Pizza Ltd. v 6034799 Canada Inc., 2022 FC 425 at para 111; Iwasaki Electric Co. Ltd. v Hortilux Schreder B.V., 2012 FCA 321 at para 18 (Iwasaki)). An intention to abandon may be inferred from a person’s failure to use the mark for an extended period of time (Iwasaki at para 21) but an owner’s intention to abandon is a factual determination in which a long period of non‑use is not necessarily required (Beijing Jingdong at para 24).
[65] I note two additional parameters in my assessment of TLG’s abandonment claim.
[66] First, TLG brought its action for expungement pursuant to subsection 57(1) of the Act. The jurisprudence draws a distinction between section 45 and 57 expungement proceedings. A trademark owner’s onus of rebutting a claim “is lighter in a section 45 case than in [a section 57] expungement proceeding” (Miller Thomson LLP v Hilton Worldwide Holdings LLP, 2020 FCA 134 at para 139 (Hilton Worldwide)).
[67] Second, there is a further distinction that is critical to my assessment of the evidence. Paragraph 18(1)(c) concerns abandonment of a trademark and not abandonment of a business. Each party introduced evidence to support its respective assertion that Ontario Inc.’s travel agency business has, or has not, ceased except for passive and minimal activity. This evidence provides critical context for my assessment of abandonment of the TRAVEL LEADERS mark. People intend the natural and probable consequences of their actions (Beijing Jingdong at para 24). The cessation of Ontario Inc.’s business leads to the natural and probable inference that it is no longer using and has abandoned its trademark. However, the converse is not true. The fact that Ontario Inc. may maintain business signage and undertake minimal business activity as a travel agent, a question I assess below, is not sufficient to establish use and non‑abandonment of its trademark. Use of a trademark requires evidence of both its use in connection with services provided and its communication to the relevant consumers: Ontario Inc.’s travel service clientele.
[68] I have carefully considered the evidence presented at trial by TLG, including that of its investigators and expert witness, the relevant statements in the parties’ Agreed Statement of Facts, and Ontario Inc.’s evidence, notably Mr. Saleh’s testimony in chief and on cross‑examination. In assessing Ontario Inc.’s operations, I accept that the COVID‑19 pandemic has significantly and negatively impacted its business since March 2020.
[69] My findings are as follows.
[70] Ontario Inc. has consistently lost money year‑over‑year. The decline in its business and financial position began shortly after the acquisition of K&S Travel in 2004. According to Mr. Saleh, the change of name and rebranding of the business in 2005 to TRAVEL LEADERS did not improve the fortunes of the business.
[71] Ontario Inc.’s key metrics derived from its financial statements for the years 2004 to 2016 inclusive show an initial net loss for the partial year 2004 of $43,568.00 and an outstanding shareholder loan of $139,715. By 2010, Ontario Inc.’s retained deficit totalled nearly $300,000. The company suffered a net loss in each ensuing year, culminating in cumulative losses and retained deficit of $459,646 and an aggregate shareholder loan amount of $562,703 at year‑end 2016.
[72] The Notes to Ontario Inc.’s 2006 unaudited financial statements include the following statement by its accountant: “The company’s ability to continue as a going concern is dependent on its ability to increase sales sufficiently to cover its expenses or receive additional funding from the shareholder or financial institutions. While management believes that the sales for 2007 will increase enough to cover costs in 2007, and also has the ability to inject for [sic] funds for working capital, if needed, it is impossible to predict with certainty that this will indeed take place, which casts doubt on the company’s ability to continue as a going concern.”
[73] The same Note to the financial statements has appeared each year on Ontario Inc.’s financial statements since 2006.
[74] Ontario Inc.’s losses have continued in the years after 2016. Its financial statements for the year ended December 2019 report a net loss of $25,115 for the year and a cumulative deficit of $519,682. Ontario Inc. is unable to meet its expenses and is reliant on cash injections from Mr. Saleh’s spouse to maintain a bank balance required to maintain its travel agency license.
[75] Ontario Inc. has no business plan for stemming its losses or generating a profit.
[76] Throughout the years leading up to 2017, Ontario Inc.’s business contracted significantly as travel agents left. Ontario Inc. terminated its last salaried employee in March 2016and has not since hired new employees. Ontario Inc. had no employees on February 14, 2017.
[77] Ontario Inc. has no plans to hire new employees.
[78] Ms. Zoe Parchem is the only independent contractor who continued to work with Ontario Inc. after March of 2016. Ms. Parchem is retirement age and does not live in Milton, Ontario, nor does she attend at the Office. She has not been identified on any Ontario Inc. invoices since January 2020.
[79] Ms. Parchem previously owned a travel agency named C’Ville Travel. Her LinkedIn profile continues to identify her as working for C’Ville Travel.
[80] Mr. Saleh testified that Ms. Parchem has been responsible for much of Ontario Inc.’s business in recent years. He also confirmed that she uses a bell.net email address and not a travelleaders.ca email address. During examination of Mr. Saleh for discovery on August 7, 2019, Ontario Inc. undertook to produce “emails exchanged between the company and client” that were missing from the records. In response, Ontario Inc. produced very few emails. There is one email from a client to Ms. Parchem dated 2018. The email was addressed to Ms. Parchem’s bell.net email address and makes no reference to or use of the TRAVEL LEADERS trademark.
[81] Ontario Inc. did not call Ms. Parchem to testify at trial despite Mr. Saleh’s evidence that she has been the company’s sole remaining travel agent, as an independent contractor, since 2016 and has been responsible for the majority of its business. The importance of testimony from Ms. Parchem on the issue of abandonment of Ontario Inc.’s trademark, and more generally the operation of its travel agency business, both before and after February 14, 2017 is self‑evident. I draw an adverse inference from Ontario Inc.’s failure to call her as a witness (Lickerish, Ltd. v airG Inc., 2020 FC 1128 at para 30).
[82] As to Ontario Inc.’s future business plans, Mr. Saleh testified that he will have to “start from the beginning,” and will need to recruit new agents and new clients.
[83] Mr. Saleh does not personally draw or receive any money from Ontario Inc., nor is he paid any commissions. Mr. Saleh testified that no one is earning money from the travel business.
[84] Mr. Saleh’s professional profile indicates that he is a licensed mortgage broker and a licensed real estate broker. His LinkedIn profile identifies him as a real estate broker and mortgage broker, not as a travel agent or owner of a travel agency.
[85] I now turn to the evidence regarding the Office, its use and the relevance of its signage.
[86] In spring 2016, TLG retained Hallmark to undertake a series of investigations to determine whether a company named Travel Leaders was a viable and operational business. Mr. Iafrate, Hallmark’s principal, conducted five investigations between May 2016 and November 2017. His first investigation consisted of online searches for Ontario Inc. Mr. Iafrate concluded that those searches suggested an existing and operational entity.
[87] As part of his four subsequent investigations, Mr. Iafrate attended at the Office. On each occasion, Mr. Iafrate observed no activity at the premises. There was no response to his knocks on the door on two occasions and he found it locked on other occasions. Mr. Iafrate reported that there was mail left outside the Office on two visits. Mr. Iafrate made phone calls to Ontario Inc. at various times and days. His calls were answered by an automatic message and were never returned. When Mr. Iafrate asked individuals in neighbouring units about Ontario Inc., they knew nothing. On cross‑examination, Mr. Iafrate stated that only one individual had seen someone at the door of the Office but conceded that it would be virtually impossible to see anyone walking down the hallway from a neighbouring unit.
[88] In 2019, TLG retained Backlit to carry out a further investigation into whether the Ontario Inc. was continuing to operate. Backlit conducted a series of five investigations between June 27, 2019 and May 31. 2022.
[89] Mr. Mohammed, a licensed private investigator employed by Backlit, attended the Office on five occasions between 2019 and 2022 to determine whether a travel agency was operating in that location. During these visits, Mr. Mohammed took photographs and video footage of the premises. He remained on site for brief periods during each visit.
[90] During his first attendance, Mr. Mohammed entered the Office and encountered three men at work. When Mr. Mohammed asked the men about the travel agency, one man explained that the owner rarely came in. He could not recall when Mr. Saleh was last in the office and provided a phone number for Mr. Mohammed to call Mr. Saleh. Mr. Mohammed called Mr. Saleh and presented himself as a potential customer looking to book travel services. Mr. Mohammed described Mr. Saleh as apprehensive and unwilling or unable to answer. Mr. Saleh advised Mr. Mohammed to send an email to book a ticket. Mr. Mohammed did not subsequently email Mr. Saleh.
[91] On Mr. Mohammed’s four remaining visits to the Office, the lights were off and there was no answer when he knocked on the door. Mr. Mohammed and Ms. Humayoun (who accompanied Mr. Mohammed to Ontario Inc.’s premises on one occasion and was also a licensed private investigator for Backlit) called the phone number from Ontario Inc.’s website. There was no response and Ms. Humayoun did not leave a voicemail message.
[92] Mr. Saleh challenged the utility of TLG’s investigations in establishing abandonment. He offered explanations for his absence from the office during certain of Mr. Mohammed’s visits in 2019‑2022. He stated that one of Mr. Mohammed’s visits to the Office occurred on a Saturday (January 29, 2022), which was outside Ontario Inc.’s business hours. Mr. Saleh stated that, on one occasion, Mr. Mohammed was at the Office at 5:30 p.m. after office hours and that, on other occasions, Mr. Saleh was either briefly out of the office or taking his son to an appointment. In addition, Mr. Saleh explained that the office lights were usually off due to the light coming in through the windows.
[93] Although Mr. Saleh testified that he continues to attend at the Office daily or when possible as he attempts to resuscitate Ontario Inc.’s travel business, I find that he is not maintaining a consistent presence at the Office. He has provided no explanation or counter for the results of Mr. Iafrate’s investigations leading up to and immediately following February 14, 2017. I also find that Mr. Saleh’s explanations for his repeated absences are not persuasive and do not compromise the scope of the Backlit investigations. In total, investigators attended the Office on nine occasions between 2016 and 2022, on different days and at different times. They did not find Mr. Saleh or any other Ontario Inc. employee or contractor working at the premises. The office door was generally locked, investigators’ knocks at the door went unanswered and the lights were off except on one attendance when three individuals were working on behalf of Ontario Inc.’s then‑subtenant. On two occasions, an investigator noted mail sitting outside the Office door. The investigators also attempted to contact Ontario Inc. by telephone numerous times between 2016 and 2022. Only the direct call to Mr. Saleh was answered.
[94] Ontario Inc. has no phone records, having abandoned its landline in favour of VOIP. Cellphone records produced by Mr. Saleh do not show that he is regularly at the Office, nor do they support claims that he receives 3‑10 calls a day for Ontario Inc. Mr. Saleh testified that another business used to lease space in the Office but there is currently no subtenant. Mr. Saleh denied that the Office only serves to display signage. He maintained that the purpose of the Office is to attract clients.
[95] In mid‑2018, Ontario Inc. sublet a significant portion of its Office (approximately 600 square feet) to MGM Consulting. MGM Consulting was not involved in Ontario Inc.’s travel business and did not renew its sublease in 2020. There is currently no subtenant in place.
[96] I conclude that the Office has not been and is not used with any regularity by Ontario Inc.
[97] There is external signage outside and in the foyer of the building in which the Office is located that displays the TRAVEL LEADERS trademark. There is also a sign in an externally facing window of the Office displaying the trademark.
[98] Mr. Saleh testified that the Office has very little walk‑in customer traffic. During cross‑examination, he acknowledged that the office space is not helping Ontario Inc. and that its clientele has decreased dramatically.
[99] I have found that the Office is not and has not been regularly open for business. There is no evidence before me of any client recognition or acknowledgment of the signage, for example, in the form of client visits to the Office. The mere existence of the signage, which I accept was in place prior to February 14, 2017, does not establish that it associates in