Venngo Inc. v. Concierge Connection Inc. (Perkopolis)

Venngo Inc. v. Concierge Connection Inc. (Perkopolis)
Court (s) Database
Federal Court of Appeal Decisions
Date
2017-05-08
Neutral citation
2017 FCA 96
File numbers
A-33-16, A-5-16
Decision Content
Date: 20170508
Dockets: A-5-16
A-33-16
Citation: 2017 FCA 96
CORAM:
STRATAS J.A.
GLEASON J.A.
WOODS J.A.
BETWEEN:
VENNGO INC.
Appellant
and
CONCIERGE CONNECTION INC. c.o.b. as PERKOPOLIS, MORGAN C. MARLOWE and RICHARD THOMAS JOYNT
Respondents
Heard at Toronto, Ontario, on January 9, 2017.
Judgment delivered at Ottawa, Ontario, on May 8, 2017.
REASONS FOR JUDGMENT BY:
GLEASON J.A.
CONCURRED IN BY:
STRATAS J.A.
WOODS J.A.
Date: 20170508
Dockets: A-5-16
A-33-16
Citation: 2017 FCA 96
CORAM:
STRATAS J.A.
GLEASON J.A.
WOODS J.A.
BETWEEN:
VENNGO INC.
Appellant
and
CONCIERGE CONNECTION INC. c.o.b. as PERKOPOLIS, MORGAN C. MARLOWE and RICHARD THOMAS JOYNT
Respondents
REASONS FOR JUDGMENT
GLEASON J.A.
[1] Venngo Inc. appeals from the December 3, 2015 judgment of the Federal Court (per Manson J.) in Venngo Inc. v. Concierge Connection Inc. c.o.b. as Perkopolis, Morgan C. Marlowe and Richard Thomas Joynt, 2015 FC 1338, 262 A.C.W.S. (3d) 465 [Venngo] in which the Federal Court dismissed Venngo’s claims for trade-mark infringement and related actions. Venngo also appeals from the January 7, 2016 costs order of the Federal Court granting costs in the respondents’ favour in the lump sum amount of $231,000 (Venngo Inc. v. Concierge Connection Inc. c.o.b. as Perkopolis, Morgan C. Marlowe and Richard Thomas Joynt, unreported Federal Court order, docket T-467-11 [Costs Order]).
[2] For the reasons that follow, I would dismiss the appeal from the judgment on the merits, but would allow the costs appeal on the basis outlined below and would remit the matter of costs to the trial judge for re-determination in accordance with these reasons.
I. Background and the Decisions of the Federal Court [3] Both Venngo and the respondent, Concierge Connection Inc. (CCI), provide discount benefit and incentive programs to Canadian organizations to facilitate the organizations’ extension of perks to their own employees or members. The organizations sign contracts with either Venngo or CCI, which, in turn, offer discounts on various products and services, such as entertainment tickets, spa visits, hotel stays, car rentals or fitness club memberships to the participating organizations’ members or employees. Human resources representatives from client organizations are generally the points of contact for Venngo and CCI. At the time of trial, Venngo and CCI were the only two such providers in Canada.
[4] Venngo was founded in 2000 and from 2007 onward has offered access to a wide range of perks to its clients’ members or employees across various sectors, using several trade-marks in connection with its business. It filed and registered the following trade-marks that are relevant to this appeal:
Trade-mark
Filed on:
Declared Use:
Registered:
WORKPERKS
May 4, 2007
Aug. 17, 2009
Sept. 15, 2009
MEMBERPERKS
May 4, 2007
Jan. 18, 2011
Feb. 28, 2011
ADPERKS
May 4, 2007
April 9, 2009
April 30, 2009
PARTNERPERKS
May 7, 2008
Aug. 13, 2009
Sept. 10, 2009
CLIENTPERKS
May 29, 2009
May 7, 2010
June 8, 2010
CUSTOMERPERKS
May 29, 2009
May 7, 2010
June 9, 2010
[5] Venngo’s trade-marks were registered in reference to a broad category of wares and services. For example, as noted by the Federal Court, the description of the wares and services for the WORKPERKS mark provides:
WARES/MERCHANDISE
Computer software, namely internet software for portal applications, networking, business to business (B2B) communications, business to consumer (B2C) communications, marketing, product and service distribution.
SERVICES
Providing packaged employee saving and value added programs delivered online and through printed publications; Providing online facilities and printed publications to allow companies to advertise and market products and services; Providing services designing, creating, hosting, maintaining, operating, managing, advertising and marketing savings and value-added programs; Providing software interfaces available over the internet with multiple users access to a wide range of information.
[6] CCI was incorporated in 2001. It initially operated in Toronto and offered an employee discount ticket and attraction program. By 2011, it expanded its offerings to sixteen categories, providing access to a wide variety of discounts beyond entertainment and attractions.
[7] CCI filed an application to register the trade-mark PERKOPOLIS on November 28, 2008 in reference to “Entertainment ticket sales and Hotel bookings services”. CCI began using the PERKOPOLIS trade-mark in 2009, and it was registered on March 1, 2011. By that time, CCI was using the PERKOPOLIS mark in respect of a variety of goods and services beyond hotel bookings and entertainment ticket sales. When CCI’s application for the PERKOPOLIS mark was filed, Venngo’s applications for WORKPERKS, MEMBERPERKS, ADPERKS and PARTNERPERKS had already been filed. The Canadian Trade-marks Office did not cite any of Venngo’s trade-marks in opposition to CCI’s application for PERKOPOLIS or the PERKOPOLIS mark in opposition to any of Venngo’s trade-mark applications.
[8] Venngo alleges that CCI’s use of the trade-mark PERKOPOLIS is an infringement of Venngo’s intellectual property rights in its own suite of perks-related trade-marks. In its action, it made several claims against CCI and the individual respondents, but abandoned some of the claims prior to or at trial. At trial, Venngo advanced claims under subsections 7(a) and 7(b), section 19, paragraph 20(1)(a) and section 22 of the Trade-marks Act, R.S.C. 1985, c. T-13 (Trade-marks Act) against CCI and the individual respondent, Morgan C. Marlowe, having abandoned all other claims in the Statement of Claim, including those against the other personal respondent, Richard Thomas Joynt.
[9] Subsection 7(a) of the Trade-marks Act requires that:
7. No person shall
7. Nul ne peut :
(a) make a false or misleading statement tending to discredit the business, goods or services of a competitor.
a) faire une déclaration fausse ou trompeuse tendant à discréditer l’entreprise, les produits ou les services d’un concurrent.
This provision in effect codifies the common law tort of injurious falsehood, which makes liable those who cause damage to competitors by making false or misleading statements that undermine the competitors’ reputations, goods or services.
[10] Subsection 7(b) of the Trade-marks Act provides that:
7. No person shall
7. Nul ne peut :
[…]
[…]
(b) direct public attention to his goods, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time he commenced so to direct attention to them, between his goods, services or business and the goods, services or business of another.
b) appeler l’attention du public sur ses produits, ses services ou son entreprise de manière à causer ou à vraisemblablement causer de la confusion au Canada, lorsqu’il a commencé à y appeler ainsi l’attention, entre ses produits, ses services ou son entreprise et ceux d’un autre.
The common law tort of passing off is essentially codified in subsection 7(b). This tort protects one party from damages that are triggered when another party attempts to “pass off” its own goods or services as those of the other through the use of a confusing mark, which may be registered or unregistered.
[11] Section 19 of the Trade-marks Act states:
19. Subject to sections 21, 32 and 67, the registration of a trade-mark in respect of any goods or services, unless shown to be invalid, gives to the owner of the trade-mark the exclusive right to the use throughout Canada of the trade-mark in respect of those goods or services.
19. Sous réserve des articles 21, 32 et 67, l’enregistrement d’une marque de commerce à l’égard de produits ou services, sauf si son invalidité est démontrée, donne au propriétaire le droit exclusif à l’emploi de celle-ci, dans tout le Canada, en ce qui concerne ces produits ou services.
Section 19 embodies the right of the registered trade-mark owner to the exclusive use of its registered trade-mark and operates to prevent the appropriation of a registered trade-mark by another party.
[12] Paragraph 20(1)(a) of the Trade-marks Act states:
20. (1) The right of the owner of a registered trade-mark to its exclusive use is deemed to be infringed by any person who is not entitled to its use under this Act and who
20. (1) Le droit du propriétaire d’une marque de commerce déposée à l’emploi exclusif de cette dernière est réputé être violé par une personne qui est non admise à l’employer selon la présente loi et qui :
(a) sells, distributes or advertises any goods or services in association with a confusing trade-mark or trade-name.
a) soit vend, distribue ou annonce des produits ou services en liaison avec une marque de commerce ou un nom commercial créant de la confusion.
Distinct from section 19, paragraph 20(1)(a) identifies an infringement where an unauthorized party uses a trade-mark that is confusing in light of (but not necessarily identical to) the claimant’s registered trade-mark.
[13] Finally, section 22 of the Trade-marks Act provides in relevant part that:
22. (1) No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.
22. (1) Nul ne peut employer une marque de commerce déposée par une autre personne d’une manière susceptible d’entraîner la diminution de la valeur de l’achalandage attaché à cette marque de commerce.
In general terms, section 22 protects against the goodwill in one party’s trade-mark being undermined by another party’s use of the trade-mark or something so closely akin to it so as to be understood as the other party’s mark.
[14] In the decision under appeal, the Federal Court dismissed Venngo’s claims under the foregoing provisions of the Trade-marks Act against CCI and Ms. Marlowe. In terms of Ms. Marlowe, the Federal Court held that there was no evidence that she acted in any way outside the normal course of her duties as an officer and director of CCI and, accordingly, concluded that there was no basis for finding her personally liable for the activities of CCI. Venngo does not challenge this finding in the present appeal. It likewise does not challenge the Federal Court’s dismissal of the claims against CCI under subsection 7(a) and section 19 of the Trade-marks Act.
[15] However, Venngo does challenge the Federal Court’s dismissal of the claims against CCI under subsection 7(b), paragraph 20(1)(a) and section 22 of the Trade-marks Act. It is therefore necessary to review the Federal Court’s treatment of these issues in more detail.
A. The Federal Court’s treatment of the claim under section 22 of the Trade-marks Act [16] The Federal Court began its discussion of the claim under section 22 for depreciation of goodwill by outlining the requirements for a successful cause of action under the section, quoting from the seminal decision of the Supreme Court of Canada in Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824 [Veuve Clicquot]. In Veuve Clicquot at paragraph 46, the Supreme Court outlined the following four elements of a successful claim under section 22: first, that a claimant’s registered trade-mark was used by the defendant in connection with wares and services whether or not they are competitive with those of the claimant; second, that the claimant’s registered trade-mark is sufficiently well-known to have significant goodwill attached to it, although it need not be famous; third, that the claimant’s mark was used by the defendant in a manner likely to affect that goodwill; and, finally, that the defendant’s actions would likely depreciate the value of the goodwill.
[17] After outlining these four elements, the Federal Court noted that “use” under section 22 of the Trade-marks Act “requires use [by a defendant] of a plaintiff’s trademark, as registered” (Venngo, para. 86). The Court noted that the only potential example of such use alleged by Venngo was CCI’s use of the phrase “MEMBER PERKS INCLUDE” on its websites. The Federal Court determined that this was not “use as a trade-mark for the purpose of distinguishing CCI’s wares or services from others, and cannot constitute the basis for a valid section 22 claim” (Venngo, para. 86). Consequently, the Federal Court dismissed the section 22 claim.
B. The Federal Court’s treatment of the claim under subsection 7(b) of the Trade-marks Act [18] In terms of the claim for passing off under subsection 7(b) of the Trade-marks Act, the Federal Court noted that, in accordance with the decisions of the Supreme Court of Canada in Ciba-Geigy Canada Ltd. v. Apotex Inc., [1992] 3 S.C.R. 120 at p. 132, 95 D.L.R. (4th) 385 [Ciba-Geigy] and Kirkbi AG v. Ritvik Holdings Inc., 2005 SCC 65 at para. 66, [2005] 3 S.C.R. 302, there are three elements to a claim for passing off: the existence of goodwill, deception of the public due to a misrepresentation and actual or potential damage to the plaintiff. The Federal Court held that Venngo had established it possessed the requisite goodwill in its trade-marks to found a claim for passing off, but that it failed to establish the other two requisite elements of the claim. More specifically, the Court held that Venngo had not shown that it had suffered any damage as a result of CCI’s use of the PERKOPOLIS trade-mark. The Federal Court also held that there was no likelihood of deception through misrepresentation for the same reasons it subsequently found there to be no likelihood of confusion between Venngo’s and CCI’s trade-marks. It thus dismissed the passing off claim under subsection 7(b).
C. The Federal Court’s treatment of the claim under paragraph 20(1)(a) of the Trade-marks Act [19] In addressing Venngo’s claim under paragraph 20(1)(a) of the Trade-marks Act, the Federal Court assessed whether there was likely to be confusion between the PERKOPOLIS trade-mark and any of Venngo’s marks. The Court noted that section 6 of the Trade-marks Act, when read with section 2, sets out the framework for assessing confusion and outlines in subsection 6(5) factors to be considered as part of the exercise. Subsection 6(5) of the Trade-marks Act states:
6. (5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including
6. (5) En décidant si des marques de commerce ou des noms commerciaux créent de la confusion, le tribunal ou le registraire, selon le cas, tient compte de toutes les circonstances de l’espèce, y compris :
(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;
a) le caractère distinctif inhérent des marques de commerce ou noms commerciaux, et la mesure dans laquelle ils sont devenus connus;
(b) the length of time the trade-marks or trade-names have been in use;
b) la période pendant laquelle les marques de commerce ou noms commerciaux ont été en usage;
(c) the nature of the goods, services or business;
c) le genre de produits, services ou entreprises;
(d) the nature of the trade; and
d) la nature du commerce;
(e) the degree of resemblance between the trade-marks or trade-names in appearance or sound or in the ideas suggested by them.
e) le degré de ressemblance entre les marques de commerce ou les noms commerciaux dans la présentation ou le son, ou dans les idées qu’ils suggèrent.
[20] After citing at length from the decisions of the Supreme Court of Canada in Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 S.C.R. 772 [Mattel], Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387 [Masterpiece] and Veuve Clicquot, the Federal Court articulated its understanding of the applicable law (Venngo, para. 105):
A distillation of these three Supreme Court decisions and consideration of the subsection 6(5) factors of the Act results in the Court having to decide:
i. As a matter of first impression, would the relevant public – primarily the [human resources] decision makers of the parties’ customers, but also end-users of the services offered by the parties, be confused or likely to be confused into thinking that the source of PERKOPOLIS services (CCI) is the same as or associated with the source of WORKPERKS, ADPERKS, CUSTOMERPERKS or MEMBERPERKS services (Venngo);
ii. In determining the likelihood of confusion, as a first step the Court will consider the degree of resemblance between the marks in appearance or sound or in the ideas suggested by the marks – the [paragraph] 6(5)(e) factor most likely to have the greatest effect on the confusion analysis (Masterpiece, above, at para 49);
iii. The other section 6 factors and surrounding circumstances must then also be considered, including the evidence of actual confusion.
[21] The Federal Court further noted that the likelihood of confusion is to be considered from the perspective of the “casual consumer somewhat in a hurry” as described in Mattel at paragraph 56.
[22] After setting out the foregoing legal framework, the Federal Court commenced its analysis of the marks in question by considering the degree of resemblance between PERKOPOLIS and each of Venngo’s trade-marks under paragraph 6(5)(e) of the Trade-marks Act. The Federal Court held that the only similarity between Venngo’s marks and the PERKOPOLIS mark was the use of the word “perk”. Because “perk” is a generic term for the types of services at issue, the Federal Court concluded that it cannot in and of itself be the basis for resemblance between the parties’ marks. It also noted that Venngo’s use of the word “perk” is associated in its marks with the intended audience for Venngo’s offerings while PERKOPOLIS is a non-specific reference that suggests the idea of “perks” but does not tie these perks to particular audiences. The Federal Court therefore concluded that it is “readily apparent that […] there is little resemblance in either appearance or sound [… or] in the ideas suggested by the marks” (Venngo, para. 110).
[23] The Federal Court observed that this conclusion tended to be confirmed by the evidence offered by some of Venngo’s own witnesses, a review of the trade-marks register revealing the common use of the term “perk” in association with benefit programs and the dictionary definitions of “perk” and “perquisite”. The Federal Court concluded that this factor favoured CCI.
[24] With respect to inherent distinctiveness and acquired distinctiveness, the Federal Court came to a similar conclusion. Noting that Venngo’s marks are “at best highly suggestive, if not descriptive” because they simply refer to “perks” (i.e. the wares and services offered) and the audiences for those perks, the Federal Court held that Venngo’s marks lack any remarkable or unique elements to render them distinct (Venngo, para. 117). The Federal Court also concluded that Venngo’s use of the generic term “perk” in its own advertising materials and on its website eroded any possible distinctiveness of its marks. Consequently, the Federal Court determined that Venngo’s trade-marks have “little inherent distinctiveness and are afforded a narrow ambit of protection” (Venngo, para. 119). The Federal Court concluded that this factor likewise favoured CCI.
[25] On the question of how long the relevant trade-marks had been in use under paragraph 6(5)(b), the Federal Court concluded that this factor favoured Venngo because use of some of its marks had pre-dated CCI’s use of PERKOPOLIS.
[26] Pursuant to paragraph 6(5)(c), the Federal Court also considered the nature of the wares, services or business at issue. Noting that the services and business of Venngo and CCI largely overlap, the Federal Court concluded that this factor also favoured Venngo.
[27] The Federal Court then addressed other surrounding circumstances. The Federal Court began by observing that CCI’s registration of its PERKOPOLIS mark occurred without any citation of Venngo’s registered trade-marks or any other marks involving the word “perk” in opposition by the Canadian Trade-marks Office and that, similarly, the Venngo marks had been registered without PERKOPOLIS being cited in opposition by the Trade-marks Office. The Federal Court found that this consideration favoured CCI.
[28] Under this heading, the Federal Court also addressed Venngo’s evidence and arguments concerning actual confusion. Venngo adduced potential evidence of actual confusion from three client representatives (Sharon Mitchell, Elizabeth Kieffer and Kevin Hayashi), one employee (Bradley Moyer) and a representative from a similar perk program for salespeople (Douglas Garcia). The Federal Court rejected Mr. Moyer’s evidence as unreliable and unnecessary hearsay. It found that the remaining evidence was insufficiently compelling to outweigh the other factors and surrounding circumstances. The Federal Court also noted that the President of Venngo agreed during his cross-examination that the nature of the trade is such that senior human resources professionals represent the customer base and that, in practice, they choose a program only after conducting some research, thereby lessening the likelihood of actual confusion.
[29] Relying on Masterpiece, the Federal Court noted that the confusion analysis is a weighing exercise that falls to the trial judge. In weighing all of the relevant factors and circumstances together, the Federal Court concluded at paragraph 129 that:
Although there was some limited evidence of confusion, it was insufficient to convince [the Court] that the casual consumer somewhat in a hurry would confuse the Venngo and CCI marks, other than simply on the basis that the parties engage in a relatively closed or “niche” market, and have chosen a generic term within their marks highly suggestive of their services, which is afforded a very narrow ambit of protection.
Given this conclusion, there was no basis to find infringement under paragraph 20(1)(a) of the Trade-marks Act.
D. The Costs Order [30] In its Costs Order, the Federal Court awarded CCI costs, inclusive of all fees, disbursements and taxes, in a lump sum amount of $231,000 in light of its disposition of the action on its merits and the submissions of the parties. In reaching its decision on costs, the Federal Court found amounts paid to its predecessor counsel and fees paid to its current counsel outlined by CCI in a solicitor’s affidavit to be reasonable, determined that there was inadequate documentary evidence to support all of CCI’s claimed disbursements, noted the implication of Venngo’s rejection of an offer to settle under Rule 420(2)(b) of the Federal Courts Rules, SOR/98-106 (the Rules) and observed that Venngo had brought and maintained multiple unmeritorious claims in the action. As a general consideration, the Federal Court concluded that a lump sum award in excess of the standard costs that would typically be assessed under Rule 400 of the Rules was appropriate given that Venngo and CCI are both sophisticated commercial parties and in light of the factors listed above. It settled on a final lump sum award that represents approximately 50% of the total fees and disbursements incurred by CCI in defence of the action.
II. Venngo’s Arguments on Appeal [31] Turning now to the arguments on appeal, Venngo first argues that the Federal Court erred in finding no confusion and thus no infringement under paragraph 20(1)(a) and no passing off under subsection 7(b) of the Trade-marks Act. Venngo asserts five errors in the Federal Court’s confusion analysis and argues that, but for these errors, the weighing exercise under subsection 6(5) of the Trade-marks Act would have resulted in a finding of confusion, or, in the alternative, would at least merit reconsideration.
[32] In terms of the errors alleged in the confusion analysis, Venngo first challenges the Federal Court’s assessment of the degree of resemblance between Venngo’s and CCI’s trade-marks. It submits that the Federal Court erred by inferring that PERKOPOLIS and Venngo’s trade-marks do not evoke in the mind of consumers the same idea. Venngo argues that PERKOPOLIS, on the contrary, suggests an umbrella program that could include Venngo’s programs. Venngo also says that the Federal Court did not give enough weight to the constituent term “perk” in assessing the degree of resemblance between the relevant marks.
[33] Second, Venngo submits that the Federal Court committed a legal error by not addressing acquired distinctiveness under paragraph 6(5)(a) of the Trade-marks Act. It points to the House of Lords’ decision in Reddaway v. Banham, [1896] A.C. 199, 13 R.P.C. 218, the Supreme Court of Canada’s decision in Pepsi-Cola Company of Canada, Ltd v. The Coca-Cola Company of Canada, Ltd., [1940] S.C.R. 17 (available on CanLII) and this Court’s decision in Miss Universe, Inc. v. Bohna, [1995] 1 F.C.R. 614, 58 C.P.R. (3d) 381 (F.C.A.) for the proposition that descriptive trade-marks can acquire distinctiveness over time, mainly by virtue of public awareness. Venngo argues that the Federal Court erred in law by not considering whether Venngo’s trade-marks had become distinct on this basis. Venngo also says that the Federal Court’s conclusions that there is goodwill attached to Venngo’s trade-marks, but that the trade-marks are not distinct, are inconsistent, primarily on the basis that the same evidence underlies both inquiries.
[34] Third, Venngo submits that the Federal Court erred in its analysis of the nature of the trade under paragraph 6(5)(d) of the Trade-marks Act. Venngo asserts that the Federal Court erred in law by improperly focusing on the due diligence of the senior human resources professionals who choose between perks programs as opposed to the first-impression lens of a consumer somewhat in a hurry as taught in Mattel. Subsequent to the appeal in this matter being heard, Venngo directed this Court to the British Columbia Court of Appeal’s recent decision in Vancouver Community College v. Vancouver Career College (Burnaby) Inc., 2017 BCCA 41 (available on CanLII) [VCC] to support its proposition that the confusion analysis turns on impressions drawn upon first encountering a mark. Venngo also argues, citing the Supreme Court of Canada’s decision in Ciba-Geigy, that the Federal Court was bound to consider the experiences of end-user consumers (e.g., employees who get access to the perks) and that, in failing to do so, the Federal Court erred in law.
[35] Fourth, Venngo argues that it was not open to the Federal Court to consider trade-mark registration proceedings in its confusion analysis.
[36] Finally, Venngo submits that the Federal Court gave too little weight to Venngo’s evidence of actual confusion and improperly determined the evidence of Mr. Moyer to be inadmissible hearsay.
[37] Venngo also submits that the Federal Court erred in its assessment of damages under subsection 7(b) of the Trade-marks Act by failing to consider Venngo’s evidence of sales diversion and trade-mark tarnishing. Again, following the hearing of its appeal, Venngo pointed this Court to the VCC decision to establish that evidence of interference with goodwill is sufficient to establish damages.
[38] On the question of depreciation of goodwill under section 22 of the Trade-marks Act, Venngo submits that the Federal Court committed a legal error under the first step of the Veuve Clicquot test by narrowing the requirement for “use” to only uses of a plaintiff’s trade-mark as it is registered. In this regard, it submits that Veuve Clicquot recognizes that a defendant need not use a mark identical to the plaintiff’s trade-mark to be liable under section 22. Rather, Venngo says that the Supreme Court held in Veuve Clicquot that section 22 could be infringed where the marks are so similar that “the casual observer would recognize the mark used by the respondents as the mark of the appellant (as would be the case if Kleenex were spelled Klenex)” (Veuve Clicquot, para. 48). Given that the Federal Court applied the wrong test under section 22 of the Trade-marks Act, Venngo says that the Court’s decision under section 22 must be set aside.
[39] In terms of the Costs Order, although Venngo raised additional points in its memorandum of fact and law, it limited its oral submissions to two arguments. First, it argues that the Federal Court improperly relied on untested hearsay evidence to establish amounts for CCI’s claimed payments to its predecessor counsel. More specifically, it says that the only evidence as to the fees, disbursements and taxes paid to CCI’s former solicitors was a hearsay statement in the affidavit one of its current counsel filed in support of these amounts. As this statement was hearsay, Venngo says that the Federal Court erred in considering it. Second, Venngo argues that the Federal Court treated CCI’s offer to settle as operative under Rule 420 of the Rules when it did not meet the requirements of that Rule. For both these reasons it requests that, even if it is unsuccessful in its appeal on the merits, the Costs Order be set aside.
III. Analysis A. Did the Federal Court err in assessing likely confusion between the PERKOPOLIS trade-mark and Venngo’s trade-marks? [40] As Venngo’s claims in large part turn on whether CCI’s PERKOPOLIS mark is likely to be confusing with Venngo’s own marks – and indeed the bulk of Venngo’s arguments on appeal target the Federal Court’s confusion analysis – it is useful to begin with this issue.
[41] In order for this Court to disturb the Federal Court’s assessment of the lack of likely confusion between Venngo’s and CCI’s marks, Venngo must demonstrate either that the Federal Court relied on an incorrect legal principle or committed a palpable and overriding error in addressing questions of fact or questions of mixed fact and law where there are no extricable questions of law: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 [Housen].
[42] Prior to discussing the five errors that Venngo says the Federal Court made in its confusion analysis, it bears repeating that we should be careful not to be overly intrusive and extricate questions of law where the dispositive question is actually driven by the facts because so doing undercuts the deference that is owed to the trier-of-fact: Housen at para. 36; Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para. 54, [2014] 2 S.C.R. 633; Teva Canada Limited v. Leo Pharma Inc., 2017 FCA 50 at para. 17 (available on CanLII). It also bears repeating that the appellate standard of review applied to questions of fact and questions of mixed fact and law from which a legal issue cannot be extricated is a deferential one. As noted by this Court in Canada v. South Yukon Forest Corporation, 2012 FCA 165 at para. 46, 431 N.R. 286:
[…] “Palpable” means an error that is obvious. “Overriding” means an error that goes to the very core of the outcome of the case. When arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall.
[43] In many respects, as is apparent from the discussion that follows, Venngo is asking this Court to intervene and conduct a de novo confusion assessment and to substitute our assessment of the evidence for that of the Federal Court. However, that is something that we cannot do on appeal. We can only intervene in factual issues or issues of mixed fact and law from which a legal issue cannot be extricated if the Federal Court made a palpable and overriding error and in legal issues if the Federal Court applied an incorrect legal principle.
(1) Resemblance [44] As concerns the first error that Venngo says the Federal Court made, Venngo urges us to find that the Federal Court erred in concluding that the term “perk” creates little commonality between the relevant marks and, relatedly, erred in its articulation of the ideas evoked by PERKOPOLIS and Venngo’s trade-marks. In both cases, Venngo is asking this Court to disturb inferences drawn from the evidence by the Federal Court. Accordingly, Venngo must establish a palpable and overriding error before we can intervene. I do not see that the Federal Court committed any such error in its treatment of either point.
[45] Even a cursory reading of the Federal Court’s decision reveals that the centrality of the term “perk” was a focus of the Court’s confusion analysis and its assessment of the degree of resemblance between the parties’ marks. Contrary to what Venngo argues must be the impact of the dominance of the term “perk”, the Federal Court explicitly noted that (Venngo, para. 108):
[…] the Court can and should have regard to a dominant component in a mark if that component is particularly striking, such that it affects the overall impression of the average consumer. While Venngo argues the word “PERK” or “PERKS” is the dominant component of the marks in issue, even if arguably “perk” or “perks” has an effect on the overall impression of the average consumer, for the reasons below I find that “perk” or “perks” as used in the Venngo trademarks is highly suggestive and hardly distinctive.
[46] The Federal Court thus determined that any dominance of the term “perk” is of little consequence because the term is descriptive. In my view, this inference was open to the Federal Court on the record and also as a matter of interpretation as trade-marks that are plainly descriptive are presumptively weak and are thus generally afforded only a narrow ambit of protection: Molson Cos. v. John Labatt Ltd. (1994), 178 N.R. 20 at paras. 5-8, 58 C.P.R. (3d) 527 (F.C.A.) [Molson]. Therefore, it was open to the Federal Court to note the descriptive nature of the term “perk” and to consider the implications of such descriptiveness in its assessment of the resemblance between the parties’ trade-marks.
[47] Similarly, Venngo has failed to demonstrate a palpable and overriding error underlying the Federal Court’s inference that there is little resemblance between the relevant trade-marks on the basis of the ideas they evoke. The core of Venngo’s argument is that the use of the term “perk” in PERKOPOLIS and Venngo’s trade-marks necessarily evokes the same kind of idea in consumers’ minds. This contention relies, once again, on “perk” being a dominant common factor. However, the Federal Court properly considered the trade-marks as they appear, without breaking them into their constituent parts, in conformity with the applicable law: Masterpiece at para. 83; Molson at para. 4.
[48] On the basis that each of Venngo’s marks is a straightforward descriptor of Venngo’s offerings and intended audience, while PERKOPOLIS is an invented suggestive term, it was not a palpable and overriding error for the Federal Court to infer that the marks evoke different ideas and as a result share little resemblance beyond the use of the descriptive term “perk”. There is a difference between the ideas the marks of the parties evoke. Consequently, Venngo has failed to demonstrate a palpable and overriding error in the Federal Court’s assessment of the “degree of resemblance” between the pertinent trade-marks under paragraph 6(5)(e) of the Trade-marks Act.
[49] In Masterpiece, the Supreme Court of Canada confirmed that the degree of resemblance is the most relevant consideration in assessing confusion. If there is no resemblance, then the other factors under subsection 6(5) become less relevant. In Masterpiece at paragraph 49, the Court stated:
[...] the degree of resemblance, although the last factor listed in s. 6(5), is the statutory factor that is often likely to have the greatest effect on the confusion analysis […]. As Professor Vaver points out, if the marks or names do not resemble one another, it is unlikely that even a strong finding on the remaining factors would lead to a likelihood of confusion. The other factors become significant only once the marks are found to be identical or very similar […].
[50] Therefore, it was open to the Federal Court to put significant weight on its determination that there was little resemblance between the parties’ trade-marks and to rely on this factor as the principal underpinning in favour of its conclusion that CCI’s mark was not likely to cause confusion with Venngo’s trade-marks.
(2) Acquired Distinctiveness [51] Moving on to consider acquired distinctiveness, Venngo is correct to note that the jurisprudence recognizes that even trade-marks with little inherent distinctiveness can nonetheless acquire distinctiveness. I do not believe that the Federal Court, though sparse in its reasons on this point, erred in determining that Venngo had failed to establish acquired distinctiveness in its marks.
[52] At the outset, Venngo frames its challenge on this point as a legal error by arguing that the Federal Court failed to consider a necessary factor under the applicable statutory test. I reject this contention. Although it might well have been preferable for the Federal Court to have offered a more explicit discussion of acquired distinctiveness, I believe that the Court’s reasoning on this point is decipherable from its decision: Canada v. Long Plain First Nation, 2015 FCA 177 at para. 143, 388 D.L.R. (4th) 209. More specifically, the Federal Court was alive to the question of the distinctiveness of Venngo’s marks as they exist and operate in the market. The Federal Court noted that Venngo had continued to use the term “perk” in a generic manner in its own advertising and website materials and, thus, had eroded any possible distinctiveness the marks might have possessed.
[53] In my view, a fair reading of the Federal Court’s reasons reveals its conclusion that the lack of inherent distinctiveness in Venngo’s marks had not been shown to have given way to any acquired distinctiveness. In other words, the Federal Court considered this issue and concluded that Venngo’s trade-marks remain indistinct. Accordingly, for this Court to intervene, Venngo needs to demonstrate that it was a palpable and overriding error for the Federal Court to give this factor little or no weight. I do not believe that Venngo has demonstrated any such error, especially in light of the lack of evidence to establish any degree of acquired distinctiveness in the Venngo marks.
[54] Lacking any such evidence, Venngo instead asserts that it was inconsistent for the Federal Court to have found goodwill in Venngo’s marks as part of its passing off analysis but to find that the marks were not distinct. This argument is misplaced. Goodwill is not synonymous with distinctiveness. As confirmed by the Supreme Court of Canada in Veuve Clicquot at paragraph 54, acquired distinctiveness is but one of many possible indicators of goodwill. However, the two are not necessarily equivalent and it was therefore open to the Federal Court to make the findings it did.
[55] I thus see no reversible error in the Federal Court’s treatment of the issues of inherent and acquired distinctiveness.
(3) Nature of the Trade [56] With respect to its arguments concerning the Federal Court’s assessment of the nature of the trade, Venngo focuses on the following statements made by the Federal Court (Venngo, para. 128):
[…] Mr. Stucke in his evidence agreed that the nature of the trade is such that most customers are relatively sophisticated senior HR professionals, who take significant time and due diligence before deciding on a service provider such as Venngo or CCI. This further reduces any likelihood of confusion.
[57] Venngo rightly notes that this excerpt represents the only occasion where the Federal Court explicitly used the words “nature of the trade” in its confusion analysis. The impugned comments form part of the Court’s discussion of