Sleep Country Canada Inc. v. Sears Canada Inc.

Sleep Country Canada Inc. v. Sears Canada Inc.
Court (s) Database
Federal Court Decisions
Date
2017-02-09
Neutral citation
2017 FC 148
File numbers
T-1739-16
Decision Content
Date: 20170109
Docket: T-1739-16
Citation: 2017 FC 148
Ottawa, Ontario, February 9, 2017
PRESENT: The Honourable Madam Justice Kane
BETWEEN:
SLEEP COUNTRY CANADA INC.
Plaintiff/Moving Party
and
SEARS CANADA INC.
Defendant/Responding Party
ORDER AND REASONS
I. Overview
[1] The Applicant, Sleep Country Canada Inc. [Sleep Country] seeks an interlocutory injunction to prevent Sears Canada Inc. [Sears] from using its “Descriptive Statement”, or slogan, “THERE IS NO REASON TO BUY A MATTRESS ANYWHERE ELSE”, which Sleep Country alleges infringes its trade-marked slogan “WHY BUY A MATTRESS ANYWHERE ELSE?”, pending the final determination of Sleep Country’s action for trade-mark infringement.
[2] Sleep Country alleges that Sears’ use of Sears’ slogan is causing Sleep Country irreparable harm. This harm is a result of confusion between the two slogans, as well as depreciation of the goodwill and loss of distinctiveness of Sleep Country’s registered trade‑marks
[3] Sleep Country’s earlier motion for an interim injunction, i.e., pending the determination of the present motion for an interlocutory injunction, was dismissed by Justice Boswell on October 25, 2016. Justice Boswell noted the three part test for an injunction (RJR-MacDonald v Canada (Attorney General), [1994] 1 SCR 311, 111 DLR (4th) 385 [RJR-MacDonald]). Justice Boswell acknowledged that a serious issue had been conceded by Sears, but found that irreparable harm had not been established. Sears submits that Justice Boswell’s Order is persuasive, and that this motion for an interlocutory injunction should also be dismissed because the evidence on the record is largely the same. Sears submits that Sleep Country has not established that irreparable harm will result, or that any resulting harm could not be quantified and compensated for in damages for loss of sales or disgorgement of profits.
[4] With due respect to Justice Boswell’s decision, I do not agree that the decision is persuasive for this motion. Justice Boswell did not provide detailed reasons, noting only that Sleep Country had not adduced clear and non-speculative evidence that it would suffer irreparable harm. The record on this motion is more extensive and the relevant time period to assess irreparable harm is very different.
[5] I have considered this motion on the basis of the record before me, the submissions of counsel, and the jurisprudence.
[6] To succeed on the motion for an interlocutory injunction, Sleep Country must establish each element of the three part test: that a serious issue has been raised; that it will suffer irreparable harm if the injunction is not granted; and, that the balance of convenience – which assesses the harm to Sleep Country and to Sears, and includes an assessment of the public interest – favours Sleep Country (RJR-MacDonald at page 334).
[7] Sears concedes for the purpose of this motion that a serious issue has been raised.
[8] For the purpose of this motion, I find that Sleep Country has established on a balance of probabilities that confusion is likely, as is depreciation of goodwill and loss of distinctiveness, between now and the determination of the infringement action, and that loss of sales and/ or other damages will result.
[9] The key issue in this application is whether Sleep Country has established, with clear and non-speculative evidence, that it will suffer irreparable harm as a result of the alleged infringement, including confusion and/or depreciation of goodwill or loss of distinctiveness, between now and the time the action is finally determined and whether this harm can be quantified and compensated in damages. If it cannot be quantified, it is irreparable.
[10] Sleep Country argues that the harm attributable to Sears’ alleged infringing conduct (the use of Sears’ slogan) is not possible to quantify, as their experts consistently state, and is, therefore, irreparable. Isolating the impact of the use of the slogan from several other changes made by Sears and from other market forces that may affect Sleep Country’s sales, reputation, and goodwill will be impossible. Sleep Country also submits that the impact of Sears’ infringement will go beyond lost sales, and that depreciation of goodwill and loss of distinctiveness are not possible to quantify.
[11] Sears argues that any harm that may result to Sleep Country from Sears’ use of its slogan can be quantified and is compensable in damages, and its expert, Mr. Harington, describes a methodology to do so.
[12] The evidence of the experts has been carefully considered. Sleep Country’s experts dispute the evidence of Sears’ experts and vice versa.
[13] Sears’ expert, Mr. Harington, provided a detailed explanation for his model to first assess the total possible lost sales and then to isolate or “parse out” the damages attributable to the infringing conduct. Mr. Harington relies on several assumptions, including a core assumption that Sleep Country and Sears will react in the same way to all other market forces. This core assumption was not set out in his affidavit, but was noted in his cross-examination.
[14] Mr. Harington’s testimony, which suggested that this assumption applied on a “store-by-store” basis rather than nationally or provincially, does not respond to the concern that he failed to set out his assumptions in his affidavit or to the lack of evidence to support his assumptions, as he acknowledged. Moreover, there are many uncertainties in the application of his model that lead me to conclude that his methodology to quantify Sleep Country’s damages and then to parse out the impact of only the allegedly infringing slogan would not be workable in the present circumstances. The application of the model would be difficult and uncertain to the point of impossibility, and as a result, would not result in quantification of any harm to Sleep Country.
[15] For the reasons elaborated on below, the injunction is granted. I find that Sleep Country has established irreparable harm between now and the disposition of this action. Sleep Country has established this irreparable harm on a balance of probabilities, using concrete and non‑speculative evidence provided by experts who refer to marketing principles and concepts, as well as the principles governing damages. In addition, the balance of convenience favors Sleep Country.
II. Background
[16] Sleep Country was founded in 1994 and now has 234 stores and 17 distribution centres in Canada. Since 1994, Sleep Country has used the slogan “WHY BUY A MATTRESS ANYWHERE ELSE?” [the Sleep Country slogan] in TV, radio, print, and on-line advertising. Sleep Country notes that the slogan is the cornerstone of its brand and marketing. The slogan is protected by two registered trademarks, TMA451875 and TMA456694, which grant Sleep Country exclusive use of the slogan.
[17] Sleep Country notes that its slogan, which is sometimes in a musical jingle, has national recognition and has reached iconic proportions. The jingle was ranked as one of Canada’s 25 catchiest jingles by the Huffington Post. The jingle was inducted into the marketing Hall of Legends and the Retail Council of Canada Hall of Fame in 2005.
[18] Sears began as a joint venture with Simpsons in 1952 as a catalog retailer, expanding to brick-and-mortar stores in 1953. Sears is a department store that sells many goods. Sears has sold mattresses for at least the past 40 years.
[19] In 2016, Sears launched a multi-faceted new marketing plan, including several changes to its logo, catalogue, website, price match guarantee, assortment of mattresses, and delivery and pick-up service, as well as its new “descriptive statement” or slogan.
[20] In July, 2016, Sears used its slogan in on-line flyers on Instagram® and Facebook®. Use of the Sears slogan expanded to printed flyers in August and September of 2016. Sears also used its slogan in radio advertisements beginning in July, continuing more broadly in September and October, and in its Black Friday advertisements in November.
[21] Sleep Country sent a cease and desist letter on August 2, 2016, informing Sears that Sears’ slogan infringed Sleep Country’s trade-marks. Sears responded through counsel on August 23, 2016, that there was no infringement and that they would not stop using the Sears slogan.
[22] Sleep Country then brought an action against Sears which seeks, among other relief: a final injunction prohibiting and restraining Sears from use of the slogan “There is no reason to buy a mattress anywhere else” or any other phrase confusingly similar to Sleep Country’s slogan; a declaration that Sears has infringed Sleep Country’s trade-marks contrary to section 20 of the Trade-marks Act, RSC 1985, c T-13[the Act]; a declaration that Sears has infringed the trade- marks in a manner likely to have the effect of depreciating the good will attaching to the trade- marks contrary to section 22 of the Act; and, a declaration that Sears has made a false or misleading statement tending to discredit the business, goods or services of Sleep Country, contrary to section 7 of the Act
[23] Sleep Country claims that Sears’ use of the infringing slogan between now and the time of the disposition of its action will cause confusion in the market and depreciation of good will and loss of distinctiveness to Sleep Country’s slogan, and that this will result in irreparable harm, including in lost sales to Sleep Country.
III. The Issues
[24] The overall issue is whether the interlocutory injunction should be granted – i.e. whether Sears should be enjoined from using its “descriptive statement” or slogan until the action for infringement is finally determined, which is not likely to be for 18-24 months, or potentially longer.
[25] The parties agree that the test to be applied is that established by the Supreme Court of Canada in RJR-MacDonald at page 334.
[26] Sears concedes for the purpose of this motion that a serious issue has been raised, noting the low threshold to establish a serious issue and that it will defend the allegations of trade-mark infringement at trial. Sears adds that this concession has no bearing on the establishment of irreparable harm, for which Sleep Country must provide clear and convincing non- speculative evidence.
[27] In RJR-MacDonald at page 341, the Court described “irreparable harm” as referring to “the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other.”
[28] Evidence of irreparable harm must be clear and non-speculative (Glooscap Heritage Society v Canada (Minister of National Revenue), 2012 FCA 255 at para 31, 440 NR 232).
[29] The need for clear and non-speculative evidence of non-quantifiable, and therefore, irreparable harm in the context of a motion for an injunction pending the determination of allegations of trade-mark infringement was emphasized by the Federal Court of Appeal in Centre Ice Ltd v National Hockey League (1994), 53 CPR (3d) 50, 166 NR 44 (CA) [Centre Ice]. The Court of Appeal held, at page 54, that “confusion does not, per se, result in a loss of goodwill, and a loss of goodwill does not, per se, establish irreparable harm not compensable in damages. The loss of goodwill and the resulting irreparable harm cannot be inferred, it must be established by "clear evidence".” [Emphasis in the original.]
[30] The key issue in this application is whether Sleep Country has established that it will suffer irreparable harm between now and the time that the action is finally determined. This issue turns on whether the evidence establishes that there is likely to be harm resulting from the alleged infringement, and whether the harm can be quantified and is compensable in damages or whether it is impossible to do so.
IV. The Evidence
[31] The evidence was submitted by way of affidavits and exhibits attached thereto and by the cross-examination of the affiants.
[32] The evidence for Sleep Country was submitted by way of one or more affidavits from: David Friesma, Chief Executive Officer of Sleep Country; Prof. Kenneth Wong, a Professor of Marketing at Stephen J.R. Smith School of Business at Queen’s University; David Kincaid, an expert in the fields of branding valuation and marketing; and Errol Soriano, a Chartered Professional Accountant, Chartered Business Valuator, and Certified Fraud Examiner, who has focused on quantification of financial loss and valuation of business interests since 1991.
[33] The evidence for Sears was submitted by way of one or more affidavits from: Melissa Schipani, the Category Manager for the Sleep Shop at Sears; Andrew Harington, a Chartered Professional Accountant, Chartered Financial Analyst, and Chartered Business Valuator, with extensive experience in business and intellectual property valuation and damages quantification; and Professor Shidhar Moorthy, a Professor of Marketing at the Rotman School of Business at the University of Toronto, with extensive academic experience, authorship of articles and text books, and experience in marketing, particularly branding.
[34] The evidence of the experts is summarized in Annex A and is referred to below with respect to the discussion of the specific issues.
V. Has Sleep Country Established Irreparable Harm?
A. Sleep Country’s Submissions
[35] Sleep Country submits that its evidence establishes on a balance of probabilities that it will suffer irreparable harm in a few ways. First, irreparable harm will manifest through lost sales that will be impossible to identify or quantify. Secondly, this harm will occur through depreciation of goodwill and loss of distinctiveness of its slogan, which is intangible harm that is not capable of quantification (Reckitt Benckiser LLC v Jamieson Laboratories Ltd, 2015 FC 215 at para 55 [Reckitt FC], var’d on other grounds 2015 FCA 104 [Reckitt FCA]).
[36] Sleep Country acknowledges that Centre Ice established that proving confusion is not enough to prove depreciation of goodwill or to prove irreparable harm: in other words, irreparable harm cannot be inferred. Sleep Country submits that in the present case, no inferences are needed as the evidence is on the record.
Confusion
[37] Sleep Country submits that it is apparent that there will be confusion due to Sears’ use of its slogan between now and the trial. Although the experts agree that there will be confusion, there is no need for an expert opinion. Confusion is assessed on a balance of probabilities. The Court is as well placed as an expert to determine whether confusion will occur by applying the established test for confusion, which is one of first impression by an average consumer (Masterpiece Inc v Alavida Lifestyles Inc, 2011 SCC 27 at paras 39, 75- 101[Masterpiece]; Veuve Clicquot Ponsardin c Boutiques Cliquot Ltée, 2006 SCC 23 at para 20 [Veuve Clicquot]).
[38] Sleep Country further submits that consumer surveys are not necessary to determine confusion and a survey would likely not meet the test of reliability and validity (Masterpiece at para 97).
[39] Sleep Country also notes that there is no requirement for evidence of actual confusion in order for the Court to find confusion on a balance of probabilities (Black & Decker Corp v Pirhana Abrasives Inc, 2015 FC 185 at paras 75-79, 130 CPR (4th) 219 [Black & Decker].
[40] Sleep Country notes that the relevant factors all point to confusion: the two slogans are strikingly similar and convey the same ideas – one as a declaratory statement and the other as a rhetorical question; its slogan is well known due to is use for over 22 years and possesses distinctiveness and goodwill; Sears began to use its slogan much more recently, in July 2016; and Sears and Sleep Country sell the same class of products to the same market of consumers through the same channels of trade.
[41] Sleep Country submits that consumers will draw an association between the two slogans, as noted by Professor Wong: this will lead to confusion in the market as consumers will mistakenly think that Sears advertisements originate from Sleep Country, that the goods and services that Sears is advertising are associated with or originated from Sleep Country, that Sleep Country’s goods are available at Sears, or that Sears and Sleep Country are associated.
[42] Sleep Country points to the evidence of Professor Wong and Mr. Kincaid, who explain how confusion will lead to loss of sales.
The losses cannot be calculated
[43] Sleep Country notes that in order to calculate damages for lost sales, it must be possible to identify the sales that were lost as a result of the infringing conduct and separate this from sales lost as a result of normal competitive factors. Where it is not possible to do so, as here, the lost sales and loss of market share constitutes irreparable harm (Ciba-Geigy Canada Ltd v Novopharm Ltd (1994), 56 CPR (3d) 289 at 333-338, 83 FTR 161 at paras 147-163 (TD)).
[44] Sleep Country also relies on Reckitt FC, where Justice Brown found that damages are not an adequate remedy when it is impossible to calculate losses due to the impossibility of determining lost sales. Sleep Country acknowledges that the facts in Reckitt were different in that Reckitt did not have a chance to establish a sales pattern because it entered the market after the alleged infringing product; however, this is not the only fact pattern that would justify a finding that the lost sales are impossible to calculate.
[45] Sleep Country also submits that much of the jurisprudence relied on by Sears, which found losses could be quantified, dealt with pharmaceutical products. These cases can be distinguished because the sale of the product was the infringing conduct and lost sales could be calculated. In the present case, the use of the slogan is the infringing conduct.
[46] Sleep Country argues that it is impossible to separate the effect of Sears’ use of its infringing slogan on sales from the many other simultaneous changes made by Sears and all other marketing activities and influences. Sleep Country submits that Sears’ experts, Ms. Schipani and Professor Moorthy, along with its own experts, Professor Wong, Mr. Soriano and David Friesma, all stated that the impact of the use of the slogan on sales cannot be determined, i.e., the damages due to the use of the slogan cannot be isolated or “parsed out”.
[47] Sleep Country disputes the model proposed by Sears’ expert Mr. Harington as unworkable. Mr. Harington states that he would be able to determine Sleep Country’s “but for” sales based on historical sales with adjustments for the other factors, and would also be able to “parse out” the effect of Sears’ use of its slogan on both Sleep Country’s and Sears’ mattress sales. Sleep Country notes that Mr. Harington acknowledges that he does not know what data will be available to apply to his model and acknowledges that he also needs to isolate the effect of use by Sears of the slogan from the other marketing elements on Sleep Country’s sales.
[48] Sleep Country notes that Mr. Harington’s “differences in difference” analysis to parse out the impact of the infringing slogan – to compare sales when Sears uses the Slogan to when it does not – assumes that all other factors stay the same and assumes that Sears will stop using its slogan at some point to permit comparisons. Sleep Country submits that there is no evidence to support either assumption.
[49] Sleep Country submits that Mr. Harington’s opinion should be ignored or discounted. His core assumption – that Sleep Country and Sears will react in the same way to all other changes in the market – is a flawed assumption, including because Sleep Country is a specialty store and Sears is a department store that sells a range of products. In addition, there is no data to support that Sleep Country and Sears react the same way to other changes. Moreover, Mr. Harington’s core assumptions were not stated in his opinion as required by the Code of Conduct for Experts.
[50] Sleep Country notes that an accounting of profits is not an alternative to lost sales because Sears may not have profits. Moreover, Sleep Country will suffer harm due to loss of distinctiveness of its slogan, which is a key marketing device, and such harm cannot be quantified.
Depreciation of goodwill and loss of distinctiveness
[51] Sleep Country acknowledges that depreciation of goodwill is distinct from confusion. Although confusion will result if use of the Sears slogan continues, there is no requirement to show confusion in order to show a depreciation of goodwill. Sleep Country submits that it need only show that depreciation is likely to occur due to a link or likely connection or mental association between Sears’ use of its slogan and the effect on Sleep Country’s goodwill, not that it will definitely occur (Veuve Clicquot at paras 38, 60, 67).
[52] Sleep Country submits that based on the test for depreciation of goodwill established in Veuve Clicquot, at para 46, depreciation of its goodwill is likely: the slogans are similar; the original slogan is sufficiently well known to possess goodwill; the use of the similar slogan by Sears is likely to have an effect on that goodwill; and the likely result of that linkage is to depreciate the value of Sleep Country’s trademarked slogan’s goodwill. Sleep Country adds that the two slogans are used in the same methods of advertising and that both Ms. Schipani and Mr. Friesen stated that the slogans conveyed the same value proposition- i.e., all you need at the best prices.
[53] Sleep Country claims that the average consumer will make a mental connection or association between Sears’ slogan and Sleep Country’s slogan; this mental connection or association will, in turn, extend to Sleep Country’s goodwill, reputation, and brand. If Sears continues to use its slogan, Sleep Country’s slogan will lose its distinctiveness.
[54] Sleep Country acknowledges that it places a value on goodwill on its balance sheet, noting that this is the value for the whole business, not just the slogan. Sleep Country submits that it is not possible to quantify the harm to its goodwill that will result from the alleged infringement. Sleep Country points to Mr. Friesma’s evidence that despite Sleep Country’s success, it has never been able to calculate the financial impact of its slogan on the value of its brand and has never been able to calculate the sales directly attributable to the slogan or to any other part of the marketing campaign.
Loss of distinctiveness
[55] Sleep Country notes that loss of distinctiveness is also a separate type of harm and it cannot be quantified in damages. Sleep Country points to Reckitt FC, at para 55 where Justice Brown found that where a confusing mark will cause a plaintiff’s mark to lose its distinctiveness, the damage to goodwill and the value of the mark is impossible to calculate monetarily.
[56] Sleep Country submits that the evidence shows that its slogan will lose distinctiveness. Mr. Kincaid and Professor Wong both stated that once the ability to link a slogan to a single seller is lost, it is almost impossible to regain or repair. They explained that repeated use by Sears of its slogan creates a link between the two slogans and erodes, or “whittles away”, the distinctiveness and effectiveness of Sleep Country’s slogan. Once lost, it will be impossible to recapture.
[57] Professor Wong noted that a loss of distinctiveness will result based on the concept of “stimulus generalization”: this is the erosion of the link between the slogan and the original brand in the mind of the consumer.
[58] Sleep Country submits that its slogan is iconic and irreplaceable, and that if its slogan is no longer exclusively associated with Sleep Country, it will need to re-invent itself to re‑establish some distinctiveness with a new slogan. It is unlikely it could achieve the same level of marketing success if it had to begin again.
B. Sears’ Submissions
[59] Sears submits that Sleep Country has failed to meet the three part test to warrant the extraordinary remedy of an injunction.
[60] Sears submits that there is no clear evidence of confusion, depreciation of goodwill, or loss of distinctiveness, and there is no evidence of irreparable harm. Sears submits that, in any event, the evidence of Sleep Country’s experts is speculative and does not meet the Centre Ice test. Sears submits that any resulting harm can be quantified either as damages for lost sales or by an accounting of profits, as Mr. Harington explained; as such, the damage is not irreparable harm.
[61] Sears acknowledges that it made several changes to its business strategy in 2016, including its pricing and promotion strategy, mattress assortment, features, and benefits. Sears states that its slogan or descriptive statement is a value proposition that is the sum or result of all the other changes. Sears describes the choice of slogan as an organic exercise. Sears submits that despite the various changes, it is possible to isolate the impact of the slogan on Sleep Country’s lost sales or on Sears’ profits.
[62] Sears notes that Sleep Country was not successful in its motion for an interim injunction. Sears submits that Justice Boswell rejected the evidence of Sleep Country with respect to confusion and found that Sleep Country had not provided clear and non-speculative evidence that it would suffer irreparable harm. Sears submits that Justice Boswell’s order cannot be distinguished; the evidence remains the same on this motion and the interlocutory injunction should not be granted.
No confusion, depreciation of goodwill or loss of distinctiveness
[63] Sears disputes Sleep Country’s claim that confusion will result in lost sales and depreciation of goodwill or that loss of distinctiveness will occur.
[64] Sears submits that Sleep Country has no new theory of confusion or actual evidence from any consumer that they are confused. Professor Wong did not have or conduct any survey to support his opinion of confusion. Sears submits that Professor Wong’s second affidavit merely reiterates his first affidavit, which Justice Boswell considered and rejected.
[65] Sears points to the evidence of Professor Moorthy, who explained that confusion is unlikely because the slogan is not used without other information indicating that the advertisement is coming from Sears rather than Sleep Country.
[66] Sears submits that even if there is evidence of confusion, loss of distinctiveness or harm to goodwill cannot be inferred. In accordance with Centre Ice, at para 9, Sleep Country must establish irreparable harm with clear and non-speculative evidence that: Sears slogan will cause confusion in the market; that Sleep Country will suffer a loss of goodwill as a result; and, that such loss is impossible to calculate in monetary terms.
[67] Sears submits that Professor Wong advanced a speculative theory of “stimulus generalization”, which means that Sleep Country’s slogan will lose its distinctiveness because consumers will not differentiate Sleep Country’s goods from those of other mattress retailers. Sears argues that this theory is inconsistent with Sleep Country’s claim that its slogan is iconic and carries brand recognition.
[68] Sears submits that Sleep Country’s reliance on Reckitt FC, at para 55, is misplaced because Reckitt FC does not establish that irreparable harm exists where a plaintiff demonstrates loss of distinctiveness. Sears argues that Centre Ice remains the guiding principle. The unique facts in Reckitt FC resulted in the finding that the harm could not be quantified.
[69] Sears also argues that there is no evidence why any loss of distinctiveness could not be regained.
Sleep Country’s losses, if any, can be quantified
[70] Sears argues that Sleep Country has not adduced any non-speculative evidence that any loss it would suffer from any confusion and resulting depreciation of goodwill or loss of distinctiveness would be irreparable.
[71] Sears submits that Sleep Country seeks to “problematize”, to coin an expression from Justice Russell in Aventis Pharma v Novopharm, 2005 FC 815 [Aventis], meaning to raise obstacles or problems regarding the calculation of any damages it may suffer.
[72] Sears notes that in Aventis at para 67, the Court found that the complexity in calculation of the harm is not clear evidence that damages are impossible to quantify. Sears argues that, just as the Court found in Aventis, Sleep Country is raising obstacles to the quantification of damages. Although there may be several variables in the market, the damages are not impossible to quantify. Sears adds that it is not necessary to estimate damages with mathematical precision.
[73] Sears submits that Sleep Country is, in effect, arguing that anytime there is an allegation of infringement, an injunction would be granted when the various factors in the marketing mix make it difficult to quantify the losses.
[74] Sears submits that it is not impossible to determine what part of Sleep Country’s damages, or what part of Sears’ profits, are attributable to the alleged infringement: this is the role of damages experts who routinely do this.
[75] Sears submits that if Sleep Country is successful at trial, Sleep Country’s damages will be capable of calculation in monetary terms at that time. Sleep Country would be entitled to either damages or an accounting of Sears’ profits. Mr. Harington explained that he can project, using historical data, what Sleep Country’s profits would have been “but for” the infringing conduct. The difference between what Sleep Country actually earned and what it would have earned “but for” the infringing conduct is the largest amount of harm that Sleep Country could have suffered. Mr. Harington explained that he could then determine what part of that amount is due to the use of the infringing slogan (i.e., “parse out”). Sears submits that, although some of the information needed for the calculations is not known now, the information will be known at the time of the trial.
[76] Sears notes that it would be up to Sears to determine the amount that is attributable to the infringing conduct – i.e. what part of the largest amount calculated – and if it fails to do so, Sleep Country would be entitled to the largest amount.
[77] Sears further submits that even if the Court finds that Sleep Country’s damages are impossible to quantify, the harm is not necessarily irreparable. Sleep Country could elect to recover Sears’ profits from the alleged infringement as any profits that Sears gained as a result of using its slogan would be owed to Sleep Country. The same apportionment, or “parsing out”, would be required. If Sears is unable to do so, Sears would be liable for the full amount.
[78] Sears submits that it will have the data needed to quantify its profits at the time of the trial of the action, and will also be able to show what part is attributable to the use of its slogan.
[79] Sears argues that Sleep Country cannot rely on the current inability to apportion the amount attributable to the use of the slogan as indicating that the harm will be impossible to quantify. Sears argues that if inability to parse out constitutes irreparable harm, despite that it would be liable for the full damages if parsing out is not possible, then injunctive relief would be granted in all such cases.
[80] Sears disputes the evidence of Sleep Country’s experts. Sears argues that Mr. Soriano conceded on cross-examination that lost sales due to the infringing conduct could be quantified, although not with precision, and agreed that Mr. Harington’s model could be applied to provide the “but for” sales within a range of plus or minus 15 %. Sears submits that precision is not required. In addition, Mr. Soriano’s comment that anyone can make a “guess” was directed at apportionment, which would be up to Sears and would be possible at trial.
VI. Sleep Country Has Established Irreparable Harm
Justice Boswell’s order
[81] Sears argues that this motion should be dismissed on the same basis as the motion for an interim injunction because the same evidence was presented and rejected in the earlier motion. Sears argued that particular evidence – for example, Professor Wong’s opinion regarding confusion and his theory of stimulus generation – was rejected by Justice Boswell. However, Justice Boswell found that irreparable harm had not been established with clear and non-speculative evidence without referring to any evidence in particular.
[82] Justice Boswell considered the motion for an interim injunction – i.e., to enjoin Sears up until this interlocutory application could be decided. That period was expected to be a matter of a few weeks. The record now before me is not the same. In addition, the relevant period of time to be considered with respect to the determination of irreparable harm is not a few weeks, but a matter of 18-24 months, or potentially longer. Despite Sears’ persistent arguments that Justice Boswell rejected particular evidence, and with due respect to Justice Boswell’s decision based on the issues and the evidence before him, I do not agree with Sears’ contention that Justice Boswell’s Order cannot be distinguished given that: I am unable to determine what aspects of the evidence Justice Boswell found fault with; the evidence before me is more detailed and the cross-examinations provide additional clarification of significant points; and, Justice Boswell considered whether irreparable harm would result within a very different and much shorter period of time.
The use of Sears’ slogan is likely to result in confusion between now and trial
[83] In Masterpiece, at para 40, the Supreme Court reiterated the test for confusion in Veuve Clicquot:
40 At the outset of this confusion analysis, it is useful to bear in mind the test for confusion under the Trademarks Act. In Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824, Binnie J. restated the traditional approach, at para. 20, in the following words:
The test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the [mark] at a time when he or she has no more than an imperfect recollection of the [prior] trademarks, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks.
Binnie J. referred with approval to the words of Pigeon J. in Benson & Hedges (Canada) Ltd. v. St. Regis Tobacco Corp., [1969] S.C.R. 192, at p. 202, to contrast with what is not to be done -- a careful examination of competing marks or a side by side comparison.
[84] In Veuve Clicquot, at para 21, the Supreme Court of Canada added that “the factors to be considered when making a determination as to whether or not a trade-mark is confusing to the somewhat-hurried consumer “in all the surrounding circumstances” include, but are not limited to, those enumerated in s. 6(5) of the Act”, and went on to list the factors in subsection 6(5) of the Trade-marks Act.
[85] In Masterpiece, at paras 75-101, the Supreme Court of Canada addressed the role of expert evidence in trade-mark cases. The Court noted, at para 75, that the same general rules apply as in other cases:
[75] Tendering expert evidence in trade-mark cases is no different than tendering expert evidence in other contexts. This Court in R. v. Mohan, [1994] 2 S.C.R. 9, set out four requirements to be met before expert evidence is accepted in a trial: (a) relevance; (b) necessity in assisting the trier of fact; (c) the absence of any exclusionary rule; and (d) a properly qualified expert. In considering the standard for the second of these requirements, “necessity”, the Court explained that an expert should not be permitted to testify if their testimony is not “likely to be outside the experience and knowledge of a judge”:
This pre-condition is often expressed in terms as to whether the evidence would be helpful to the trier of fact. The word “helpful” is not quite appropriate and sets too low a standard. However, I would not judge necessity by too strict a standard. What is required is that the opinion be necessary in the sense that it provides information “which is likely to be outside the experience and knowledge of a judge or jury”: as quoted by Dickson J. in R. v. Abbey, supra. As stated by Dickson J., the evidence must be necessary to enable the trier of fact to appreciate the matters in issue due to their technical nature. [p. 23]
[86] In assessing the necessity criteria in the context of confusion, the Court noted, at para 80:
[80] The first problem was that much of the expert testimony did not meet the second Mohan requirement of being necessary. In a case such as this, where the “casual consumer” is not expected to be particularly skilled or knowledgeable, and there is a resemblance between the marks, expert evidence which simply assesses that resemblance will not generally be necessary. And it will be positively unhelpful if the expert engages in an analysis that distracts from the hypothetical question of likelihood of confusion at the centre of the analysis.
[87] Sears asks the Court to draw an inference from the lack of actual evidence of confusion; however, no such inference is warranted. The Court can assess the likelihood of confusion in the absence of actual evidence of confusion to a consumer, as noted by Justice Manson in Black & Decker at para 75-79. As noted by Professor Wong, a methodologically sound consumer survey would not have been possible within the time period preceding this motion and, in his view, was not necessary.
[88] Moreover, the jurisprudence has established that in circumstances like the present, the Court is as well placed as an expert to determine whether confusion will occur (Masterpiece, at paras 75- 101). In the present case, although the experts opine on confusion, the Court is equally capable of making this determination.
[89] Sleep Country’s experts stated that there will be confusion due to Sears’ use of its slogan between now and trial, and explained how the confusion would arise and its consequences. Mr. Kincaid was cross-examined extensively on his opinion that consumers hearing the slogan or jingle of Sleep Country might be confused and think of Sears, even if the slogan is accompanied by the brand name “Sleep Country”. Mr. Kincaid did not change his overall opinion that the two slogans would create confusion.
[90] Professor Wong explained that consumers will draw an association between the two slogans, which will lead to confusion in the market. Consumers will mistakenly think that Sears’ advertisements originate from Sleep Country, that the goods and services that Sears is advertising are associated with or originated from Sleep Country, that Sleep Country’s goods are available at Sears, or that Sears and Sleep Country are associated.
[91] Sears’ expert, Professor Moorthy, expressed the contrary view that Sears “descriptive statement” is unlikely to cause confusion and, to the extent that it does, the confusion is likely to benefit Sleep Country. He explained that both slogans are advertising “puffery”. The Sleep Country slogan is well recognized, and few people will likely recall the Sears’ slogan. He added that those who do recognize the slogan will incorrectly identify it as coming from Sleep Country. Professor Moorthy also opined that confusion is unlikely because the slogan will be used in conjunction with the name “Sears” or “Sleep Country”.
[92] I do not find Professor Moorthy’s opinion to be consistent or persuasive. There is no support for his assumption that the slogans will be used with the store n