Mainstreet Equity Corp. v. Canadian Mortgage Capital Corporation

Mainstreet Equity Corp. v. Canadian Mortgage Capital Corporation
Court (s) Database
Federal Court Decisions
Date
2022-01-10
Neutral citation
2022 FC 20
File numbers
T-2080-17
Decision Content
Date: 20220110
Docket: T-2080-17
Citation: 2022 FC 20
Ottawa, Ontario, January 10, 2022
PRESENT: Mr. Justice Pentney
BETWEEN:
MAINSTREET EQUITY CORP.
Plaintiff
and
CANADIAN MORTGAGE CAPITAL CORPORATION, ATRIUM MORTGAGE INVESTMENT CORPORATION, CANADIAN MORTGAGE SERVICING CORPORATION, CMCC CAPITAL FUND (GP) INC, DREAM CMCC CAPITAL FUND (GP) INC., DREAM CMCC CAPITAL FUND LIMITED PARTNERSHIP, DREAM CMCC CAPITAL FUND II (GP) INC., AND DREAM CMCC CAPITAL FUND II LIMITED PARTNERSHIP
Defendants
JUDGEMENT AND REASONS
I. Introduction
[1] The Plaintiff, Mainstreet Equity Corporation, claims that the Defendants are violating its trademarks by using their registered trademark as well as related unregistered marks. Mainstreet argues that this is particularly egregious, because in an earlier proceeding, the Trademark Opposition Board (TMOB) refused the application by one of the Defendants, the Canadian Mortgage Capital Corporation (CMCC), to register a design that is virtually identical to the one it is now using. This refusal was based on Mainstreet’s objection that the two designs were confusing.
[2] Prior to the TMOB decision on Mainstreet’s objection, the Defendant Atrium applied to register a trademark using an identical design or logo as the one CMCC had previously tried to register (the Atrium Mark). The Atrium registration was granted in September 2016. Mainstreet claims that Atrium’s trademark is invalid and should be expunged. It also claims that it is entitled to an injunction and damages because the Defendants have engaged in passing off. In addition, Mainstreet claims punitive damages, because Atrium persisted in using the Mark despite its knowledge of Mainstreet’s trademark claim.
[3] The Defendants argue that there is no basis to question their trademark, because it is validly registered and there is no confusion caused by the two marks. It argues that there is no basis for any damages award or injunction, because there has been no passing off and its registration is a complete defence to any claim.
[4] For the reasons that follow, I am dismissing Mainstreet’s claim. I am not persuaded that there is a likelihood of confusion between the Marks, and thus the claim of passing off is not made out. I am also not persuaded by Mainstreet’s arguments that the Atrium Mark should be expunged from the register.
II. Background
A. The Parties
[5] Mainstreet is a publicly traded Canadian residential real estate corporation organized and existing under the laws of Alberta. It was established in 1997. Mainstreet’s main focus is on the acquisition, refinancing, rental, management and sale of residential properties in Canada. This involves buying underperforming mid-sized apartment buildings, renovating them, and then placing them back on the market at rental rates that reflect their increased value. Mainstreet owns and operates properties throughout Western Canada, including in Saskatchewan, Alberta and British Columbia. It also operated for a time in Ontario, but has long-since stopped doing business there.
[6] Mainstreet uses an unregistered logo comprised of a stylized building design as well as its corporate name; it has also used the building design on its own. (Note: both parties refer to their designs as a “skyscraper” logo; to avoid confusion I will refer to each one by the party’s name). The Mainstreet trademarks in issue are shown below as “a” and “b” (Mainstreet Marks):
[7] For ease of reference, the trademark set out at (a) above will be referred to as the “Mainstreet Composite Mark” and the version set out at (b) above will be referred to as the “Mainstreet Design Mark”.
[8] In addition, Mainstreet is the owner of the word mark “MAINSTREET” (TMA975503), which has been registered since July 11, 2017 in association with “residential property management.”
[9] Mainstreet used prior logos at least as early as 1998, but these were discontinued around 2001-2002, when it began to use the current versions of its trademarks, set out above. The prior logos are shown below:
[10] The Defendants comprise a number of related companies: (1) Atrium; (2) CMCC; (3) Canadian Mortgage Servicing Corporation (CMSC); (4) CMCC Capital Fund; (5) Dream CMCC Fund I (Dream CMCC LP I and Dream CMCC Inc. I); and (6) Dream CMCC Fund II (Dream CMCC LP II and Dream CMCC Inc. II). In summary, all of these companies are involved in the real estate industry, broadly defined:
● Atrium, which is a publicly listed company, is a non-bank lender whose clients are primarily real estate developers;
● CMCC is a mortgage brokerage company and mortgage funds manager;
● CMSC is a mortgage servicing company; and
● the various Capital Funds (CMCC Capital Fund, Dream CMCC Fund I and Dream CMCC Fund II) provide related financing services through real estate investment funds.
[11] The Defendant Atrium owns Canadian Trademark Registration no. TMA 949,353 (Atrium mark), which was registered on September 15, 2016 in association with “mortgage investment services: provision of mortgage loans”:
[12] For ease of reference, I will refer to this as the Atrium Mark.
[13] Certain of the other Defendants, namely CMCC, CMSC and CMCC Capital Fund display the Atrium Mark together with their various corporate names. These are set out in Appendix A. Neither Dream CMCC Funds I or Dream CMCC Fund II have a logo or mark, but they have made limited use of the marks used by CMCC and CMCC Capital Fund.
[14] Atrium also owns registered trademarks for the wordmarks “ATRIUM” (TMA949,354) and “ATRIUM MORTGAGE INVESTMENT CORPORATION” (TMA864,981), in association with mortgage investment services.
B. Prior Proceedings
[15] On October 4, 2012, CMCC applied for registration of the Atrium Skyscraper Design on the basis of use in Canada since at least as early as May 2012 in association with mortgage investment services. This is the design that was applied for:
[16] For ease of reference, I will refer to this as the Atrium Skyscraper Design, because it was subsequently incorporated into the Atrium registration.
[17] The application was advertised on June 12, 2013, and Mainstreet filed a statement of opposition on August 12, 2013, claiming that the Atrium Skyscraper Design had not been used in Canada and was confusing with its trademarks (both the Mainstreet Composite and the Mainstreet Design Mark set out above as (a) and (b)). CMCC denied these allegations.
[18] The Trade-marks Opposition Board (TMOB) refused CMCC’s application on September 24, 2015 (2015 TMOB 164). The TMOB found that the determinative issue was whether the two marks were confusing, as claimed by Mainstreet’s opposition based on paragraph 16(1)(a) of the Trademarks Act, R.S.C. 1985, c T-13 [the Act]. The TMOB began by reviewing the evidential burden on an opponent to support the allegations set out in its statement of opposition, noting that if this burden was met, the applicant had a legal onus to prove its case by showing that its application does not contravene the provisions of the Act as claimed by the opponent.
[19] Turning to the merits, the TMOB noted that Mainstreet’s best chance of success was with the Mainstreet Design Mark. Based on the evidence filed before it, the Board found that Mainstreet had provided evidence of use of its Design Mark prior to May 2012 and continuing through 2014. This shifted the onus to CMCC to establish, on a balance of probabilities, that as of the date of first use, namely May 2012, there was not a reasonable likelihood of confusion between its Atrium Design Mark and the Mainstreet Design Mark.
[20] The TMOB applied the criteria set out in s 6(5) of the Act to assess confusion. It found that both parties’ marks possessed a limited degree of inherent distinctiveness “as both suggest that the parties’ services are related to skyscrapers or other high-rise buildings” (TMOB Decision, para 15). On the length of use, the TMOB concluded that there was no evidence that the CMCC mark was known to any extent in Canada as of the date of first use (May 2012), whereas the Mainstreet mark was known to some extent in Canada as of this date because it had appeared on Annual Reports since at least 2002, on Mainstreet’s website and Twitter account, as well as on pamphlets and flyers distributed in its buildings and on signage outside of its buildings. The TMOB found that use of the Mainstreet Composite Mark, including both the Mainstreet Skyscraper Design and the words “MAINSTREET EQUITY CORP”, was such that use of this trademark also constituted use of the Mainstreet Design Mark, citing Nightingale Interloc Ltd. v Prodesign (1984), 2 CPR (3d) 23, [1984] TMOB No 52 at para 20).
[21] The TMOB then turned to the degree of resemblance, which the TMOB acknowledged is the factor that will often have the greatest effect on the confusion analysis (citing Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27 [Masterpiece] at para 49). The TMOB summarized the approach set out in the jurisprudence: the marks must be considered in their totality; it is not correct to lay the marks side-by-side to compare similarities or differences between the elements, but rather the preferable approach when comparing marks is to begin by determining whether there is an aspect of the trademarks that is particularly striking or unique (citing Veuve Cliquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23 [Veuve Cliquot ] at para 20 and Masterpiece at para 64).
[22] Applying this to the marks in question, the TMOB concluded at paragraph 21:
… I assess that there is a high degree of resemblance between the trade-marks at issue. The most striking feature of each of the parties’ trade-marks is that these trade-marks are comprised of a depiction of skyscrapers or other large buildings which are formed through the grouping of squares and rectangles. To the extent that both marks suggest services related to skyscrapers or other large buildings, the ideas suggested are the same, however, I do not consider that either party would be entitled to a monopoly in respect of such an idea as applied to the respective services of the parties.
[23] The TMOB also considered the nature of the goods, services, business or trade, finding that the overlap in the nature of the services and trade between CMCC and Mainstreet was “tangential at best since the parties’ services are targeted at different customers with different needs (those looking for rental accommodations versus those looking for financing and mortgages)” (para 24). The TMOB did find, however, that there was an overlap in the nature of the business of the parties since CMCC was in the business of providing financing to those in the real estate field. It was not convinced that the fact that both parties appeared to target investors to be particularly relevant given that Mainstreet did not refer to such services in its statement of opposition.
[24] CMCC had filed evidence about the state of the Register of Trade-Marks, arguing that designs showing skyscrapers were common in the field of real estate and therefore Mainstreet’s design should only receive a very narrow scope of protection. The TMOB accepted that state of the register evidence can be used to draw inferences about the state of the marketplace, but only where large numbers of relevant registrations are located. On this question, however, the TMOB noted that both marks featured a building or buildings “created by the grouping of small square and/or rectangular shapes” and it found that there was “insufficient evidence to conclude that consumers are used to distinguishing such highly similar designs.” (para 27)
[25] Based on this analysis, the TMOB concluded:
[29] Having regard to all the surrounding circumstances set out above, in particular the similarity between the parties’ trade-marks, the overlap in the nature of the business of the parties, and the fact that only [Mainstreet] has evidenced use of its Skyscrapers Design Trade-mark at the material date, I conclude that [CMCC] has not discharged its burden of establishing on a balance of probabilities, that the Mark is not confusing with the [Mainstreet] trade-marks. This ground of opposition is successful.
[26] The TMOB also found that the opposition based on s 2 of the Act was successful, because the evidence did not show sufficient simultaneous use of the parties’ trademarks to enable it to infer that confusion is unlikely, in the absence of evidence of factual confusion. Because it found that the balance of probabilities were evenly balanced between a finding that the Atrium Mark is distinctive and one that it is not, the TMOB concluded that CMCC had not met its legal onus and therefore it upheld this ground of opposition as well.
[27] In light of its findings, the TMOB refused CMCC’s application on September 24, 2015. There was no appeal from this decision.
[28] To complete the narrative, it is worthwhile noting that on July 30, 2015 (a few months before the TMOB decision), Atrium applied for the registration of its trademark, using the same design as CMCC but adding “Atrium Mortgage Investment Corporation” directly below the logo. The registration was granted on September 15, 2016.
[29] At some point in 2016, on the advice of legal counsel, a licence agreement was entered into granting Atrium the rights to use the Atrium Skyscraper Design logo, and CMCC was granted a non-exclusive licence to use that design in its branding. This is discussed in more detail below.
C. The Evidence Presented at the Summary Trial
[30] The summary trial proceeded on the basis of examination and cross-examination of the principal affiant for both sides, together with certain other affidavits on which there was no cross-examination. In addition, the affidavits included a substantial number of documentary exhibits.
[31] Although both sides attempted, to some degree, to call into question the credibility of the other’s principal witness, I found that both Mr. Lam and Mr. Goodall presented their evidence in a straightforward manner, and their credibility was not diminished in any significant way during cross-examination..
(1) Mainstreet’s Evidence
[32] The principal affiant for Mainstreet was Johnny Lam, who joined Mainstreet as its Chief Financial Officer (CFO) in 1998, a position he held until 2017. He was also appointed its Chief Operating Officer (COO) in 2012, and so he was both CFO and COO between 2012 and 2017. In these roles, he has overseen all aspects of Mainstreet’s finances, operations and business development. He was examined and cross-examined on his affidavit at the summary trial.
[33] Mr. Lam gave evidence about Mainstreet’s business, its growth and expansion over the years, as well as its efforts to promote its brand and attract both tenants to its rental units and investors as its shareholders. He described Mainstreet’s business, which is identifying and buying under-performing mid-sized apartment buildings, improving them through renovations and efforts to reduce their operating costs, then putting them back into the rental market at higher rents to reflect the increased value of the properties. Mainstreet also sometimes sells mature real estate properties so that it can put its capital into newer properties with higher potential.
[34] Mr. Lam described Mainstreet’s growth and expansion, from its initial focus on properties in Calgary, Alberta, its expansion to Edmonton and Lethbridge in Alberta, Surrey, Abbotsford and Kamloops in British Columbia, as well as Saskatoon and Regina in Saskatchewan. He indicated that it also operated in Toronto, Ontario for a period, but it closed its operations there in 2009 and sold its final properties in 2014. Mr. Lam’s evidence is that in 1998, Mainstreet held 272 units at a market value of approximately $17 million. By September 2019, it held 12,901 units with a market value of $2.04 billion. Since 1998, Mainstreet has been publicly traded, has been listed as among Alberta’s largest corporations, and was listed as one of Canada’s most profitable public companies (ranking 202nd).
[35] Mr. Lam described Mainstreet’s target markets as existing and potential investors, as well as members of the public who are looking for housing. It targets these markets through print and online resources, as well as signage outside its many properties. Its yearly spending on advertising, marketing and promotion has grown from over $400,000 in 2010 to $1.4 million in 2019, with a transition over time from traditional paper-based advertising to an increased investment in online advertising, for example through Google ads. This evolution has been matched by Mainstreet’s increased presence on social media, including Facebook, Twitter, LinkedIn, Instagram and Pinterest.
[36] Mainstreet’s use of its various trademarks is also described in Mr. Lam’s affidavit, and this evidence is set out more fully in the analysis below. Briefly, Mr. Lam’s evidence is that Mainstreet has used both its Skyscraper Mark and its Design Mark on a regular and ongoing basis.
[37] Mainstreet also relied on the affidavit of Alisha Schell, a law clerk employed by Norton, Rose Fulbright, counsel for the Plaintiff. Her affidavit enclosed transcripts of the examination for discovery of Robert Goodall (the Defendants’ principal witness), as well as an undertakings/refusals chart, and certain other productions, as well as historical information about the Defendants’ website obtained from the “Wayback Machine” (www.internetarchive.org). In addition, she provided copies of certain correspondence between counsel for the parties. She was not cross-examined.
(2) The Defendants’ Evidence
[38] The principal affiant for the Defendants was Robert Goodall, the President, COO and Founder of Atrium, CMCC and CMSC. He has held these positions since each of these companies was founded. He is also the President and a Director of the CMCC Capital Fund, Dream CMCC Fund I and Dream CMCC Fund II (collectively the Capital Funds). As President, he is responsible for the general supervision of the business and affairs of each entity, and ultimately for their branding including the selection and use of the trademarks.
[39] Mr. Goodall described the nature of the Defendant businesses, the services provided by each of them, and his active role in the operations and marketing of the various entities. He states that he is ultimately responsible for the branding of these companies, including the selection and use of trademarks. His evidence sets out the growth of these businesses, their clientele, and their general operations. In summary, he described the various Defendant companies in the following way:
● Atrium – a publicly traded Canadian non-bank lender that provides financing solutions to real estate developers in Ontario, Alberta and British Columbia. Atrium is a Mortgage Investment Corporation (MIC) under the Income Tax Act, RSC 1985, c 1 (5th Supp.). His evidence is that approximately 95% of Atrium’s mortgage portfolio and business is related to borrowing by real estate developers. The rest of its mortgages are loans on individual single-family homes, where borrowers are unable to obtain traditional bank financing. As of June 2019, Atrium was one of the top four MICs in Canada, with assets over $750 million and a market capitalization of $525 million.
● CMCC – manages Atrium’s business through an exclusive management agreement (Atrium has only one employee). CMCC is a mortgage brokerage and mortgage funds management company, whose sole business is originating and underwriting mortgages, sourcing and managing investments in real estate projects, and managing public and private mortgage funds. It has mortgage brokerage licenses in Ontario, British Columbia and Alberta, and until June 2019, in Saskatchewan. It is a private company, and Mr. Goodall is the majority owner. Between 1994 and 2020, it had arranged financing on over $6 billion in real estate in Ontario.
● CMSC – it is a wholly owned subsidiary of CMCC. Since 2000, CMSC has provided mortgage servicing to mortgage lenders and investors. It specializes in providing back-office services for its customers, and it has over $1 billion of mortgages under its administration. It services and manages a variety of loan structures for life insurance companies, banks, trust companies and private investors. CMSC’s largest client is Atrium.
● The Capital Funds – these funds operate as joint venture partners with real estate investors and developers, and they typically take an equity stake in joint venture real estate projects. Entities related to CMCC contribute substantial funds to each of the Capital Funds, and they also attract high net worth individual investors. A typical minimum subscription to invest in one of the Capital Funds is between $200,000 and $500,000. These funds are not marketed to the general public. The funds invest primarily in residential condominium developments that are not yet built, and commercial development and re-development projects in Toronto and Vancouver. They do not invest in acquiring or redeveloping existing apartment buildings or existing single-family homes.
[40] Mr. Goodall described the creation of the Atrium Design Mark. He also described the prior proceedings involving the parties before the TMOB and subsequent events; this evidence is discussed in more detail below.
[41] The Defendants also relied on three other affiants:
● Jason Williams – a private investigator who described his search for other trademarks on the database of the Canadian Intellectual Property Office (CIPO), and in particular other trademarks showing buildings or using a design representing the letter “M”;
● Katrina Bright – a law clerk with Bereskin & Parr LLP, counsel for the Defendants, whose affidavit enclosed correspondence between counsel showing their consent to the use of CIPO printouts rather than obtaining certified copies;
● Lori-Anne DeBorba – a law clerk with Bereskin & Parr LLP, filed a confidential affidavit enclosing transcripts of the examinations for discovery of Mr. Goodall as well as answers to undertakings.
III. Issues
[42] The first question is whether this is a suitable case for summary trial. If so, it is necessary to examine Mainstreet’s claim, which involves two main branches: (i) that Atrium’s registered trademark is invalid under s 18 of the Act ; and (ii) that Mainstreet is entitled to damages and an injunction because Atrium has engaged in passing off, contrary to paragraph 7(b) of the Act. As a threshold matter, Mainstreet must establish that it has a valid trademark.
[43] It will be convenient to deal with the issues in the following order:
A. Is this case suitable for a summary trial?
B. Does Mainstreet have an enforceable trademark?
C. Has Mainstreet established that the Defendants have engaged in passing off, contrary to paragraph 7(b) of the Act?
D. Is Atrium’s registration invalid, under section 18 of the Act, and is its use properly licensed under section 50 of the Act?
E. Is Mainstreet entitled to the remedies it seeks?
IV. Analysis
A. Summary Trial
[44] The parties jointly proposed that this was a suitable case for a summary trial, and it is not necessary to discuss this point in any detail, because I agree that summary trial is an appropriate procedure. While the consent of the parties is not determinative, it is an important consideration in determining whether it is “suitable” and “just” to proceed by way of summary trial: Tremblay v Orio Canada Inc., 2013 FC 109 at para 26; Iamgold Corporation v Hapag-Lloyd AG, 2019 FC 1514 at paras 8-10, aff’d (although not on this point) 2021 FCA 110.
[45] In assessing whether summary trial is appropriate, factors such as the complexity of the matter, urgency, cost, time, expert evidence, and whether a summary trial risks “litigating in slices” are relevant considerations: see ViiV Healthcare Company v Gilead Sciences Canada, Inc., 2021 FCA 122 at para 38, and the cases cited therein.
[46] In this case, the issues are not particularly complex, the evidence is by way of affidavit supported by an extensive documentary record, and the principal affiants for each party were examined and cross-examined. There is sufficient evidence for adjudication of the issues, and although there are some conflicts in the evidence, credibility was not a significant factor. There is no risk of “litigating in slices” because the summary trial will address all of the issues between the parties and will determine the outcome of the action.
[47] I am therefore persuaded that this is a suitable case for summary trial, that it would allow the efficient resolution of the dispute between the parties and that it would not be unjust to decide the issues in the case by summary trial.
B. Does Mainstreet have an enforceable trademark?
[48] Mainstreet is seeking to enforce its rights in respect of its unregistered trademarks, claiming that Atrium has engaged in passing off contrary to paragraph 7(b) of the Act. A threshold requirement is that the claimant establish that it has a valid and enforceable trademark, whether registered or unregistered, at the time the defendant first began directing public attention to its own goods and services (Sandhu Singh Hamdard Trust v Navsun Holdings Ltd., 2019 FCA 295 [Hamdard Trust] at para 39; Nissan Canada Inc. v BMW Canada Inc., 2007 FCA 255 at para 14). This requirement appears to derive from constitutional constraints on federal jurisdiction in relation to trademarks (Kirkbi AG v Ritvik Holdings Inc., 2005 SCC 65 at paras 3, 26).
[49] The Act defines a trademark at s 2 as a “sign or combination of signs that is used by a person for the purpose of distinguishing or so as to distinguish their goods or services from those of others…” The Act defines a trade name as “the name under which any business is carried on, whether or not it is the name of a corporation, a partnership or an individual.”
[50] A trademark is deemed to be used “in association with services if it is used or displayed in the advertising of those services” (Trademark Act, s 2).
(1) The Submissions of the Parties
[51] Mainstreet claims that it has used both of its trademarks since at least 2001-2002, and continuously since then. It argues there is abundant evidence showing use of the Mainstreet Composite Mark, including on its Annual Reports and on outdoor signage outside Mainstreet properties. In addition, Mainstreet points to its large and steadily-increasing advertising budget, arguing that its Skyscraper Mark has consistently appeared on its advertisements since 2002. This includes advertising on the Mainstreet website (www.mainst.biz), its social media accounts including Instagram, YouTube, Facebook, Twitter, LinkedIn and Pinterest, as well as its advertising through Google ads. Mainstreet also points to the mark’s appearance in its print advertising, including 10,000 business cards and 44,000 folders and pamphlets distributed to tenants each year, as well as advertisements placed in Canadian print publications from 2000 to 2016. Some of this advertising was directed to tenants and prospective tenants, while the rest of it was directed towards investors and potential investors.
[52] Mainstreet also relies on evidence showing its use of the Mainstreet Design Mark on its own, including its Annual Reports for the years 2001, 2002 and 2003, as well as outdoor signage outside of Mainstreet properties in Edmonton from May 2004 to June 2019; in Calgary from August 2007 to May 2019; in Surrey, British Columbia from October 2007 to June 2016; and in Mississauga, Ontario, from October 2007 until May 2009.
[53] The Defendants do not seriously dispute the evidence showing that Mainstreet has used its Composite Mark in association with its real estate business, but they claim that the evidence does not support a finding that Mainstreet has used its Design Mark. Atrium argues that out of the thousands of pages of documents produced and exchanged between the parties and filed in evidence, there are only four examples of the use of the Mainstreet Design Mark without the word “Mainstreet” appearing close by. Atrium says that there are more instances of the use of the corporate name “Mainstreet” appearing alone (i.e. with no Design Mark) in advertising relating to the Plaintiff than there are of its use of the Mainstreet Design Mark on its own. For these reasons, Atrium argues that Mainstreet has failed to meet its burden of establishing that it has used the Mainstreet Design Mark so as to give it a valid enforceable trademark. It does not dispute that the Mainstreet Composite Mark is valid and enforceable, based on the evidence of use in Canada.
(2) Discussion
[54] Under subsection 4(2) of the Act, a trademark is deemed to be used in association with services “if it is used or displayed in the performance or advertising of those services.”
[55] Use of a trademark must be established in order to obtain protection under the law, and in the absence of proof of use, a registered trademark can be expunged, and an unregistered mark will not be enforceable. This is captured in the well-known passage by Justice Binnie in Mattel, Inc. v 3894207 Canada Inc., 2006 SCC 22 [Mattel]:
5 Unlike other forms of intellectual property, the gravamen of trade-mark entitlement is actual use. By contrast, a Canadian inventor is entitled to his or her patent even if no commercial use of it is made. A playwright retains copyright even if the play remains unperformed. But in trade-marks the watchword is “use it or lose it”. In the absence of use, a registered mark can be expunged (s. 45(3)).
[56] The debate between the parties on this issue relates to whether the evidence shows Mainstreet’s use of its Design Mark, as opposed to the legal principles that apply.
[57] There is no dispute that Mainstreet has demonstrated that it used the Mainstreet Composite Mark as of May 2012, the date Atrium first used its registered trademark. The evidence clearly establishes a wide variety of instances of the use of the Composite Mark by Mainstreet in association with its real estate services, including: in its corporate annual reports, quarterly updates and presentations; on signage displayed inside and outside of Mainstreet’s properties; on its website and social media presence, as well as in a large number of pamphlets, posters and other printed material distributed to tenants and prospective tenants; and, in its advertising materials. The record is replete with examples of such use, ranging over a span of years.
[58] The evidence is more limited regarding Mainstreet’s use of its Design Mark. Mainstreet points to the use of the Design Mark in its Annual Reports for the years 2001, 2002 and 2003, as well as its display on signs outside of its properties in Edmonton from May 2004 to June 2019, in Calgary from August 2007 to May 2019, in Surrey B.C. from October 2007 to June 2016, and in Mississauga Ontario from October 2007 to May 2009.
[59] Atrium submits that the evidence shows only four instances of use of the building signage without the word MAINSTREET appearing in close association with the mark. It says that the vast majority of instances show either use of the Mainstreet Skyscraper Mark, or of the word MAINSTREET appearing alone. For example, it points to the examination of Mr. Lam, during which he admitted that Mainstreet uses its trademark logo and corporate name in the vast majority of cases, as well as his admission that the company uses its name alone in some marketing materials.
[60] Although the evidence does not show that the Mainstreet Design Mark was used as often as the Mainstreet Skyscraper Mark, there is sufficient evidence to show the consistent use of the Design Mark by Mainstreet during the relevant period. The Design Mark appears on its own in several instances, including its Annual Reports for 2001, 2002 and 2003. In addition, the evidence shows that the Design Mark is often used with the company’s name displayed beside it in vertical format on signage outside of Mainstreet properties. The following is an example of this display of the Design Mark:
[61] Sometimes the Mainstreet Design Mark is used and the company’s name appears on the same page, but it is not displayed directly below it in the format used in the Mainstreet Composite Mark. I am satisfied that the evidence supports the conclusion that Mainstreet has used its Design Mark, as well as its Composite Mark, on a consistent basis. The fact that Mainstreet’s Design Mark is often displayed together with its registered Word Mark does not diminish the use by Mainstreet of its Design Mark.
[62] In light of this, I find that Mainstreet has established that both its Composite Mark and its Design Mark are valid, enforceable unregistered trademarks.
C. Has Mainstreet established that Atrium has engaged in passing off?
[63] Paragraph 7(b) of the Trademarks Act codifies common law passing off by prohibiting a trader from directing public attention to their goods, services or business in a manner likely to cause confusion between them and the goods, services or business of another. The necessary elements of a passing off claim are the existence of goodwill, deception of the public due to a misrepresentation, and actual or potential damage: Ciba-Geigy Canada Ltd. v Apotex Inc., [1992] 3 SCR 120 at p. 132. In this case, Mainstreet must establish:
i. Goodwill or reputation: attached to the services it supplies, in the mind of the purchasing public, by reason of association with the identifying get up, recognized as distinctive of its services;
ii. Confusion: that the Defendants have made a misrepresentation to the public (whether intentional or not) resulting in or likely to result in the public concluding that Atrium’s services are associated with those of Mainstreet; and
iii. Damages: that it has suffered or will suffer damage as a result of the erroneous belief caused by the Defendants’ misrepresentation regarding the source of the services.
[64] The claimant must also show ownership of a valid registered or unregistered trademark at the time the defendant first began directing public attention to its own goods and services: Hamdard Trust at para 39. In this case the Defendants claim they first used the Atrium Mark in May 2012. I have found that Mainstreet has established valid and enforceable trademarks as of this date.
(1) Goodwill or Reputation
[65] In assessing goodwill or reputation for the purposes of passing off, the jurisprudence points to factors such as inherent or acquired distinctiveness, length of use, surveys showing customer awareness, volume of sales, extent and duration of advertising and marketing, and intentional copying: Hamdard Trust at para 48.
[66] Mainstreet argues that by May 2012, its Skyscraper Mark had developed a distinctive reputation and goodwill amongst investors (actual and potential), the wider real estate industry, and members of the general public looking for rental accommodation. It notes that establishing distinctiveness is not a high bar: “[i]t is generally significant and sufficient if even a small percentage of the relevant market recognizes the indicia as a trademark.” (citing Gill, K., Fox on Canadian Law of Trademarks and Unfair Competition, Toronto: Carswell, 2002, 4th edition at 4.4(h)(ii), p. 4.72.3).
[67] Pointing to the evidence showing extensive use of its Composite Mark and its Design Mark prior to May 2012, Mainstreet argues that by any measure, its Marks were distinctive at the relevant date. This is reinforced by the growth and success of Mainstreet’s business, conducted in association with its Composite and Design Marks, which Mainstreet says is a testament to the significant reputation and goodwill it had developed.
[68] Atrium submits that Mainstreet has failed to demonstrate any goodwill in its Design Mark, nor has it established goodwill in the relevant marketplace given the differences between the businesses and markets. Atrium also notes that Mainstreet has not established any goodwill in its older marks because it has not used them since 2001 and 2002. This point is not in dispute and so it will not be discussed further.
[69] On the Mainstreet Design Mark, Atrium argues that Mr. Lam repeatedly affirmed that Mainstreet uses its Composite Mark in the vast majority of cases. He also agreed that some marketing materials only feature the word MAINSTREET, with no display of the logo. Based on the fact that there are only a handful of examples in the evidence where Mainstreet used its Design Mark alone in social media posts, Atrium argues that Mainstreet has failed to show any goodwill in the Design Mark alone.
[70] In addition, Atrium argues that the prominence of the word MAINSTREET in the displays of the Composite Mark makes the business name the distinctive feature of the Mark. Atrium argues that Mr. Lam acknowledged that the name of the business enjoys goodwill within Mainstreet’s market, namely renters in the cities in which it operates and shareholders who invest or may invest in the business. According to Atrium, the fact that Mainstreet’s Instagram and Facebook profiles and many of its recent posts do not use the Skyscraper logo at all is further proof that the distinctive feature of the Plaintiff’s Marks is the word MAINSTREET, not the Atrium Skyscraper Design.
[71] Applying the factors set out in Hamdard Trust, I am satisfied that Mainstreet has established substantial goodwill associated with its Mainstreet Composite Mark. The evidence shows widespread and consistent use of the Mark, dating back to the alleged first use of the Atrium mark. The growth of the business, the nature, reach and scope of its advertising, and the consistent use of the Mainstreet Composite Mark on signage inside and outside of its buildings and on printed material it distributes widely in the marketplace all point to the fact that it has built up substantial goodwill in its “brand” expressed through its Composite Mark.
[72] I am also satisfied that Mainstreet has established goodwill associated with its Design Mark. Although the evidence shows that this is not the Mark that Mainstreet uses most often, I am satisfied that the Design Mark has been displayed for a sufficient period of time outside of Mainstreet properties to support the conclusion that Mainstreet has accumulated goodwill associated with the Design Mark.
[73] I am not persuaded by Atrium’s argument that the more recent use of the MAINSTREET name alone, without the accompanying Skyscraper logo, makes the name the distinctive feature of the Mark. The word “Mainstreet” is not particularly distinctive, other than suggesting a connection to a common street name and more general commercial location found in most towns and cities. Although it may suggest a somewhat vague connection to real estate, in reality the term itself is not particularly distinct.
[74] I accept that the name plus the logo have acquired a certain distinctiveness in the markets in which Mainstreet operates, and this is consistent with the growth of Mainstreet’s advertising investment and the reach of its messages, which in turn is matched by the growth of the business itself. However, the evidence shows that throughout this period Mainstreet has mainly used its Composite Mark as its primary identifier in the marketplace. This is not consistent with the conclusion that the distinctive feature of the Mark has become the business name standing alone.
[75] Atrium also argues that Mainstreet has not established that it has any goodwill in the marketplace in which Atrium operates, citing Sadhu Singh Hamdard Trust v Navsun Holdings Ltd., 2016 FCA 69 [Sandhu 2016] at para 25. It submits that the two companies are not competitors, and it notes that Mr. Lam conceded that Ma