Milano Pizza Ltd. v. 6034799 Canada Inc.

Milano Pizza Ltd. v. 6034799 Canada Inc.
Court (s) Database
Federal Court Decisions
Date
2018-11-06
Neutral citation
2018 FC 1112
File numbers
T-152-17
Decision Content
Date: 20181106
Dockets: T-152-17
Citation: 2018 FC 1112
Ottawa, Ontario, November 6, 2018
PRESENT: The Honourable Madam Justice Mactavish
BETWEEN:
MILANO PIZZA LTD.
Plaintiff
and
6034799 CANADA INC.; CHADI WANSA; YOUSSEF ZAHER, A.K.A. JOSEPH ZAHER; AND YOUSEF NASSAR, A.K.A. JOE NASSAR
Defendants
AND BETWEEN:
6034799 CANADA INC.; CHADI WANSA; YOUSSEF ZAHER, A.K.A. JOSEPH ZAHER; AND YOUSEF NASSAR A.K.A. JOE NASSAR
Plaintiffs By Counterclaim
and
MILANO PIZZA LTD.; MAZEN KASSIS; MARWAN KASSIS; MAHMOUD TABAJA; MILANO BASELINE; AND JOE KASSIS
Defendants By Counterclaim
JUDGMENT AND REASONS
[1] The Plaintiff, Milano Pizza Ltd., is the owner of registered trademark No. TMA571,144 for MILANO PIZZERIA and the accompanying Design for use in relation to take-out restaurant services with delivery. The MILANO Design Mark is depicted below:
[2] The Plaintiff also claims to own the unregistered trademarks MILANO PIZZERIA and MILANO PIZZA, as well as copyright in the registered MILANO Design Mark. The registered and unregistered trademarks claimed by the Plaintiff will be referred to collectively in these reasons as the “MILANO marks”.
[3] The Plaintiff commenced an action in this Court alleging that the Defendants have infringed its exclusive copyright and trademark rights in the registered MILANO Design Mark, and that they have also directed public attention to their business in such a way as to cause confusion between their business and that of the Plaintiff. The Plaintiff further alleges that the Defendants have unlawfully passed off their goods and services for those of the Plaintiff, and that they have depreciated the value of the goodwill attaching to the Plaintiff’s registered MILANO Design Mark.
[4] The Defendants defended the action and brought a counterclaim seeking a declaration that registered trademark No. TMA571,144 is invalid. The Defendants further seek damages and injunctive relief against the Defendants by Counterclaim related to their alleged direction of public attention to their goods, services and business in a manner likely to cause confusion with that of the Defendants.
[5] The Defendants have brought a motion for summary judgment seeking to have the Plaintiff’s action dismissed. The Plaintiff also seeks summary judgment in its favour on all of the issues, with the exception of its copyright claim.
[6] For the reasons that follow, I have found that there is no genuine issues for trial with respect to the registrability of the MILANO Design Mark under paragraph 18(1)(a) of the Trade‑marks Act. Consequently, summary judgment will issue in the Plaintiff’s favour in relation to this issue. I am also satisfied that there is no genuine issue for trial with respect to the Plaintiff’s copyright claim, and summary judgment will issue in the Defendants’ favour dismissing the Plaintiff’s action to the extent that it is framed in copyright.
[7] I am, however, satisfied that there are genuine issues for trial with respect to the remaining issues raised by the parties in their pleadings. As a result, the motion for summary judgment will otherwise be dismissed.
I. The Parties
[8] The Plaintiff, Milano Pizza Ltd., owns and operates the Milano pizzeria business, which it describes as “a group of independently owned and operated pizzerias”.
[9] The corporate Defendant, 6034799 Canada Inc., operates a pizzeria at 1141 Baxter Road, in the City of Ottawa. The individual Defendants, Chadi Wansa, Youssef Zaher a.k.a. Joseph Zaher, and Yousef Nassar a.k.a. Joseph Nassar, are the sole Directors of the corporate Defendant.
[10] The individual Defendants by Counterclaim are the sole Directors of the Plaintiff, Milano Pizza Ltd. Marwan Kassis, Mazen Kassis, Mahmoud Tabaja (and a fourth individual who is not a party to this action) each own 25% percent of the shares in Milano Pizza Ltd. The Defendant by Counterclaim Milano Baseline is a business known to the public as “Milano Pizza”, located at 2529 Baseline Road in the City of Ottawa. It is operated by the Defendant by Counterclaim Joe Kassis.
[11] Various members of the Kassis family have been involved in the events giving rise to this action. In the interests of clarity, I will refer to the members of the Kassis family by their first names in these reasons.
II. Background
[12] A brief review of the background facts giving rise to this action is necessary in order to put the issues raised by the Defendants’ motion into context.
[13] Marwan Kassis (one of the Defendants by Counterclaim) identifies himself as the founder of the Milano pizzeria business, although it appears that various members of the Kassis family have owned and operated pizzerias in the Ottawa area since the late 1970’s.
[14] In the early years, Milano pizzerias were operated directly by members of the Kassis family. By the early 1990’s, there were six pizzerias operating in as Milano pizzerias in various parts of the City of Ottawa, one of which was the Milano pizzeria operating at 1141 Baxter Road.
[15] In the mid-1990’s, Marwan began selling individual Milano pizzeria businesses to other individuals to own and operate.
[16] The Baxter Road location was sold to an independent operator in 1994. While there is disagreement in the evidence as to the identity of the purchaser, I understand the parties to agree that by 1996, the Baxter Road location was owned first by Vahid Khorrami, and then by Mr. Khorrami and his brother Farid, as shareholders in a numbered company. They continued to operate the restaurant as a Milano pizzeria until December of 2002, when they sold the Baxter Road pizzeria to the corporate Defendant, 6034799 Canada Inc. The corporate Defendant continues to operate the Baxter Road pizzeria to this day.
[17] As will be discussed in greater detail further on in these reasons, there is a serious dispute between the parties with respect to the terms governing the sale of the Baxter Road pizzeria, initially to Mr. Khorrami and his partners, and, subsequently, to the Defendant, 6034799 Canada Inc. The Plaintiff asserts that purchasers of Milano pizzerias, including the Baxter Road pizzeria, were at all times subject to licencing agreements governing the use of the MILANO marks, while the Defendants and Mr. Khorrami strenuously deny that they were ever party to any such agreements.
[18] Milano Pizza Ltd. was incorporated in May of 1996, following which Marwan’s Milano pizzeria business was transferred to the newly-incorporated entity, continuing under that name. Marwan subsequently sold a quarter-interest in Milano Pizza Ltd. to each of Mazen, Mahmoud Tabaja and the fourth individual. There are currently 35 pizzerias operating under the Milano pizzeria name in Ottawa and eastern Ontario.
[19] The logo depicted in the MILANO Design Mark came into use by Milano Pizza Ltd. (or its predecessor) and the independent Milano pizzeria operators at some point in the mid-1990s. Milano Pizza Ltd. applied to register the mark in October of 1997, claiming first use of the mark in March of 1994. After some initial reluctance on the part of the Trade-mark office to register the mark, it was finally registered in November of 2002.
[20] While claiming the right to use the phrase “Milano Pizzeria” in association with take-out restaurant services with delivery, the right to the exclusive use of the word “pizzeria” apart from the trademark was specifically disclaimed by the Plaintiff. The Plaintiff further states in its memorandum of fact and law that it does not claim ownership of the word “Milano” per se, as a trade-mark or otherwise.
[21] While I do not understand there to be any dispute as to the identity of the registered owner of the MILANO Design Mark, there is a significant disagreement between the parties as to the validity of the registration, the circumstances surrounding the creation of the mark, the terms under which it and the other Milano marks were used by the operators of Milano pizzerias, and whether the Plaintiff’s registered ownership of the MILANO Design Mark is lawful.
[22] It appears that the relationship between the parties was very good for many years. However, it began to deteriorate starting in or around 2013, culminating in the complete breakdown of the relationship by 2016, and the commencement of this action in 2017.
[23] The Defendants continue to operate the Baxter Road pizzeria under the “Milano pizzeria” name. They admit that the corporate Defendant continues to use the MILANO marks in the general course of conducting its business.
III. The Law Regarding Motions for Summary Judgment
[24] Before addressing the merits of the Defendants’ motion, it is important to have an understanding of the law governing motions for summary judgment in the Federal Court.
[25] The purpose of summary judgment is to allow the Court to summarily dispense with actions that ought not to proceed to trial because they do not raise a genuine issue to be tried, thereby conserving scarce judicial resources and improving access to justice.
[26] The Supreme Court of Canada had occasion to review the law governing motions for summary judgment and to discuss the values that underlie the summary judgment process in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. While the Federal Court of Appeal has held that Hryniak did not materially change the procedures or standards to be applied in summary judgment motions brought under the Federal Courts Rules, SOR/98-106, the Supreme Court’s decision does nevertheless serve as a reminder of principles guiding the interpretation of the Federal Courts Rules: Manitoba v. Canada, 2015 FCA 57 at para. 11, [2015] F.C.J. No. 214.
[27] Indeed, while Hryniak was decided under the Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (which are worded differently from the Federal Courts Rules relating to summary judgment), the Supreme Court clearly stated that the values and principles underlying its interpretation of the Ontario Rules of Civil Procedure “are of general application”: Hryniak, above at para. 35.
[28] The Supreme Court observed in Hryniak that lengthy pre-trial processes and protracted trials, with the accompanying expense and delay “can prevent the fair and just resolution of disputes”: at para. 24 (emphasis in the original). Amongst other things, the summary judgment process can improve access to justice for litigants who might not otherwise be in a position to utilize the justice system for the resolution of disputes: Hryniak, above at para. 4. See also paras. 21-33.
[29] As a consequence, the Supreme Court held that “summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims”: Hryniak, above at para. 5. That said, to be “fair and just”, the process followed “must permit a judge to find the facts necessary to resolve the dispute and to apply the relevant legal principles to the facts as found”: Hryniak, above at para. 28.
[30] Summary judgment in the Federal Court is governed by the provisions of Rules 213 to 215 of the Federal Courts Rules, the full text of which is set out in Appendix “A” to these reasons.
[31] Rule 215(1) provides that the Court shall grant summary judgment where the judge is satisfied that “there is no genuine issue for trial with respect to a claim or defence”. According to the Supreme Court, there will be “no genuine issue for trial” if there is no legal basis to the claim, or if the judge has “the evidence required to fairly and justly adjudicate the dispute”: Hryniak, above at para. 66. See also Manitoba, above at para. 15, and Burns Bog Conservation Society v. Canada, 2014 FCA 170, at paras. 35-36, 2014 F.C.J. No. 655.
[32] The Federal Courts Rules also contemplate that where there is a genuine issue of fact or law for trial, judges may conduct a summary trial in accordance with the provisions of Rule 216. In such cases, judges have greater powers to decide disputed questions of fact: Manitoba, above at para. 16. However, no such request was made in this case and it would be inappropriate for the Court to conduct a summary trial in the absence of a request from the parties: Manitoba, above at para. 18.
[33] The test on a motion for summary judgment “is not whether a party cannot possibly succeed at trial; rather, it is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial”. As a consequence, “summary judgment is not restricted to the clearest of cases”: both quotes from Canada (Citizenship and Immigration) v. Campbell, 2014 FC 40 at para. 14, [2014] F.C.J. No. 30, citing ITV Technologies Inc. v. WIC Television Ltd., 2001 FCA 11 at paras 4-6, 199 F.T.R. 319; Premakumaran v. Canada, 2006 FCA 213 at paras 9-11, [2007] 2 F.C.R. 191; Canada (Minister of Citizenship and Immigration) v. Schneeberger, 2003 FC 970 at para. 17, [2004] 1 F.C.R. 280.
[34] The onus is on the party seeking summary judgment to establish that there is no genuine issue for trial. However, parties responding to motions for summary judgment are also required to “put their best foot forward” in their response: F. Von Langsdorff Licensing Ltd. v. S.F. Concrete Technology, Inc. (1999), 165 F.T.R. 74 at paras. 12 and 27, [1999] F.C.J. No. 526.
[35] Responses to motions for summary judgment cannot be based upon what might be adduced as evidence at a later stage in the proceeding. Respondents must instead set out specific facts in their response to a motion for summary judgment and adduce the evidence showing that there is a genuine issue for trial: Rule 214. See also MacNeil Estate v. Canada (Indian and Northern Affairs Department), 2004 FCA 50 at para. 37, [2004] F.C.J. No. 201. This requirement has been described as necessitating that a responding party “lead trump or risk losing”: see Kirkbi AG v. Ritvik Holdings Inc. (1998), 150 F.T.R. 205 at para. 18, [1998] F.C.J. No. 912.
[36] As noted above, to be “fair and just”, the record before the motions judge must permit the judge to find the facts necessary to resolve the dispute: Hryniak, above at para. 28. Summary judgment should therefore not be granted where the necessary facts cannot be found, or where it would be unjust to do so.
[37] The jurisprudence is clear that issues of credibility ought not to be decided on motions for summary judgment. Generally, a judge who hears and observes witnesses giving evidence orally in chief and under cross-examination will be better positioned to assess the witnesses’ credibility and to draw the appropriate inferences than a judge who must depend solely on affidavits and documentary evidence: TPG Technology Consulting Ltd. v. Canada, 2013 FCA 183 at para. 3, [2013] F.C.J. No. 836.
[38] Without hearing oral evidence, a motions judge faced with a genuine issue for trial cannot properly assess credibility or sift through and weigh the evidence: MacNeil Estate, above at para. 38. Consequently, cases should go to trial where there are serious issues with respect to the credibility of witnesses: Newman v. Canada, 2016 FCA 213 at para. 57, [2016] F.C.J. No. 952; Suntec Environmental Inc. v. Trojan Technologies, Inc., 2004 FCA 140 at paras. 20 and 28-29, [2004] F.C.J. No. 636; MacNeil Estate, above at para. 32.
[39] That said, “the mere existence of apparent conflict in the evidence does not preclude summary judgment”. Judges have to take a “hard look” at the merits of the case and decide if there are issues of credibility that need to be resolved: Granville Shipping Co. v. Pegasus Lines Ltd. S.A., [1996] F.C.J. No. 481 at para. 7, [1996] 2 F.C. 853.
[40] Judges dealing with motions for summary judgment must, moreover, proceed with care, as the effect of the granting of summary judgment will be to preclude a party from presenting any evidence at trial with respect to the issue in dispute. In other words, the unsuccessful party will lose its “day in court”: see Apotex Inc. v. Merck & Co., 2004 FC 314 at para. 12, 248 F.T.R. 82, aff’d 2004 FCA 298, [2004] F.C.J. No. 1495.
[41] With this understanding of the relevant principles governing motions for summary judgment, I turn now to consider the merits of the Defendants’ motion. The first issue for determination relates to the validity of the Plaintiff’s registered MILANO Design Mark.
IV. Is Registered Trademark No. TMA571,144 Valid?
[42] The Defendants assert that the registration of the MILANO Design Mark is invalid on the basis that it was not registrable at the date of registration. They further submit that it was not distinctive at the time proceedings bringing the validity of the registration into question were commenced, and the Plaintiff was not the person entitled to secure the registration.
[43] The Plaintiff also asks for summary judgment declaring that the MILANO Design Mark registration is valid and has been infringed by the Defendants.
[44] Two of the Defendants’ validity arguments involve questions as to the degree of control that has been exercised by Milano Pizza Ltd. over the use of the MILANO Design Mark by the Defendants and others. That is, there is a dispute between the parties as to whether the use of the MILANO Design Mark by the independent Milano pizzeria operators generally, and by the owners and operators of the Baxter Road pizzeria in particular, was carried out pursuant to a licensing agreement, such that any use was under the control of the Plaintiff and inured to its benefit.
[45] Consequently I will start my analysis by considering whether there is a genuine issue for trial with respect to the existence of a licensing agreement between the Plaintiff and the Defendants before addressing the Defendants’ validity arguments.
V. Is There a Genuine Issue for Trial as to the Existence of a Licencing Agreement Between the Plaintiff and the Defendants?
[46] Both sides have adduced a significant amount of evidence regarding the terms under which the MILANO marks have been used by the independent Milano pizzeria operators, including the Defendants. In order to determine whether or not there is a genuine issue for trial with respect to the nature of the relationship between the parties, it is necessary to review the evidence adduced by both sides in some detail.
A. The Plaintiff’s Evidence
[47] The Plaintiff asserts that all of the independent Milano pizzeria operators use the MILANO marks, including the MILANO Design Mark, under license, and under the control of the Plaintiff.
[48] According to the Plaintiff, in exchange for the right to use the MILANO marks, the licensing agreements with the independent Milano pizzeria operators required that they purchase all of the supplies for their pizzerias, with the exception of vegetables and accounting supplies, from a supplier designated by the Plaintiff. The Plaintiff asserts that this allowed it to maintain a level of control over the taste and quality of the food served at Milano pizzerias.
[49] The Plaintiff would then receive rebates from its designated supplier, based on the value of purchases by the independent operators. In addition to providing it with an income stream, the Plaintiff claims that it uses rebate monies for marketing and promoting the Milano pizzeria business.
[50] The Plaintiff further contends that the licensing agreements with the independent Milano pizzeria operators imposed geographic restrictions on the operators whereby they were precluded from advertising or accepting food orders outside of a specified territorial area.
[51] Insofar as the Baxter Road pizzeria is concerned, both Marwan and Mazen Kassis have provided affidavits in which they swear that its operators were at all times subject to a licensing agreement governing their use of the MILANO marks.
[52] Mazen Kassis deposes that the Baxter Road pizzeria was sold in 1994 to a purchaser who operated the pizzeria pursuant to a license granted by his brother, Marwan. Mazen further states that in the first few years after the incorporation of the Plaintiff, “many” (but presumably not all) of the independent Milano pizzeria operators had formal written licensing agreements with the Plaintiff. In support of this claim, he has produced a 1999 invoice from a solicitor acting for the Plaintiff for services including the preparation of a “mini-franchise agreement”.
[53] Mazen further asserts that even if they had not entered into a written licensing agreement, all of the operators “were using the MILANO PIZZERIA trademarks under license, and all were subject to at least the Purchasing Commitment and the Territory Restriction, as is the case today”. According to Mazen, this included Vahid Khorrami, who, it will be recalled, was one of the owners of the Baxter Road location immediately prior to its acquisition by the Defendants.
[54] Mazen claims that a written licensing agreement was entered into by the Plaintiff and the corporate Defendant around the time of the sale of the Baxter Road pizzeria to the Defendants, which agreement set out the terms under which the corporate Defendant could use the MILANO marks. In addition to the purchasing commitment and the territorial restriction, Mazen states that the corporate Defendant agreed to pay a “royalty fee” of $500.00 a month to the Plaintiff for the use of the MILANO marks.
[55] The Plaintiff has been unable to produce a copy of this licensing agreement. Mazen states that he has searched the Plaintiff’s records and that he has been unable to locate its copy of the agreement. He asserts that “as best [he] can tell, it was destroyed in a flood that occurred in Marwan’s home in 2005”.
[56] Mazen states that the requirement that the corporate Defendant pay a $500.00 a month “royalty fee” was dropped by mutual agreement in 2005. With that modification to the terms of the licensing agreement, Mazen asserts that the Defendants operated the Baxter Road location under license for more than 14 years, generally complying with both the purchasing commitment and the territorial restriction.
[57] In support of this claim, Marwan has produced sales records from Tannis Food Distributors - the Plaintiff’s designated supplier - reflecting purchases made for the Baxter Road pizzeria over the years. These records confirm that the Defendants purchased a substantial volume of supplies from the company.
[58] According to Mazen, relations between the Plaintiff and the Defendants started to go awry in 2015, culminating in the termination of the Defendants’ licensing agreement by the Plaintiff on June 29, 2016. At that time, the Plaintiff demanded that the Baxter Road restaurant cease to brand itself as a Milano pizzeria, something that the Defendants have refused to do.
[59] In his affidavit, Marwan Kassis generally agrees with Mazen’s version of events.
[60] Although he does not recall who signed the agreement, Marwan confirms that there was a written licensing agreement between the Plaintiff and the Defendants governing “the essential terms of operating a MILANO PIZZERIA (i.e. buying MILANO PIZZERIA brand sauce, cheese, pepperoni from Tannis, and restricting advertising to their territory)”, as well as the royalty fee.
[61] Marwan acknowledges that the Plaintiff has been unable to locate a copy of the licensing agreement entered into with the Defendants. He states that it was likely destroyed in a flood that occurred at his home. In support of this contention, Marwan has produced a letter from his insurance underwriter, which states that he held renter’s insurance with State Farm in the years between 1999 and 2014, during which time four claims were presented to the company. No mention is made as to when these claims were made, or what they related to.
[62] Marwan takes issue with Vahid Khorrami’s claim that he operated the Baxter Road location independently, exercising “complete control” over how he advertised and marketed the business. Marwan agrees that independent Milano pizzeria operators “had a lot of freedom”, including control over how they advertised and marketed their businesses. However, he asserts that all of the pizzerias, including the Baxter Road pizzeria, had to purchase their supplies from a designated supplier, and had to restrict their sales and advertising to their geographic territory. Subject to these rules, Marwan agrees that independent Milano pizzeria operators “were free to operate their business as they saw fit”.
[63] The Plaintiff has also produced an affidavit from George Shacker. Mr. Shacker worked as a sales representative for Tannis Food Distributors in Ottawa, and was the primary sales representative selling food and supplies to all of the Milano pizzeria locations. He states that for certain types of supplies, specifically cheese, pepperoni and pizza sauce, independent Milano pizzeria operators purchased only MILANO PIZZERIA-branded products. Before these products came into being, independent operators only purchased cheese, pepperoni and pizza sauce brands designated by the Plaintiff.
[64] Mr. Shacker further asserts that, like all of the other independent Milano pizzeria operators, the Defendants bought “the vast majority” of their supplies from Tannis Food Distributors, including all of their cheese, pepperoni and pizza sauce.
[65] Finally, the Plaintiff has produced affidavits from seven independent Milano pizzeria operators, each of whom confirms that they operate their Milano pizzerias pursuant to written licensing agreements with the Plaintiff, although one of the operators, Ari Fazil, acknowledges that only one of his three Milano pizzerias is subject to a written licensing agreement, with the rules governing the other two locations being unwritten.
[66] Most of the licensing agreements with independent Milano pizzeria operators that have been produced by the Plaintiff state that the Plaintiff “has registered the name of ‘Milano Pizza’ as a trademark”. The agreements go on to state that the Plaintiff grants the licensee “a non-exclusive license to use the name of ‘Milano Pizza’ on certain terms and conditions”. There is no specific reference in these agreements to the MILANO PIZZERIA Design Mark, although some agreements do refer to the ‘Milano logo’.
B. The Defendants’ Evidence
[67] The Defendants deny ever entering into a licensing agreement (whether written or unwritten) with either Marwan Kassis or the Plaintiff governing the use of the MILANO marks.
[68] In addition, Vahid Khorrami deposes that at no time during the period that he owned the Baxter Road pizzeria was his operation ever subject to a licensing agreement regarding the use of the words “Milano Pizzeria” as the name of the business. He says that he was at all times “completely free to do whatever [he] want[ed] with the name ‘Milano Pizzeria’” and the MILANO Design Mark.
[69] Mr. Khorrami further asserts that the owners of the Baxter Road pizzeria operated entirely independently of the Plaintiff, exercising complete control over how they advertised and marketed their business, making their own choices with respect to menu items, recipes and ingredients.
[70] According to Mr. Khorrami, the centralization of purchasing came into effect sometime around 1996. The reason for this initiative was the awareness that by pooling their purchases, independent Milano pizzeria operators would be able to obtain financial discounts and rebates that could then be applied to a common marketing and advertising budget. Mr. Khorrami agrees that this arrangement made good business sense, but he asserts that the centralized purchasing arrangement was “purely voluntary”, and that while he bought some of his supplies from a central supplier, he used other suppliers for some products.
[71] Mr. Khorrami claims that the centralized purchasing system for the Milano pizzerias worked well for the first year, and that the financial discounts and rebates that resulted from higher volumes of purchases were used for common marketing and advertising to the benefit of all of the independent Milano pizzeria operators. However, after a year or so, Mr. Khorrami says that Marwan unilaterally changed this arrangement, claiming ownership of both the rebates and the newly-designed MILANO Design Mark. Mr. Khorrami states that he chose to ignore Marwan’s demands and continued to operate the Baxter Road pizzeria independently, using his own menus, ingredients and recipes, as well as his own pizza box stamps, advertising and marketing materials. To the extent that he continued to purchase supplies from the designated supplier, Mr. Khorrami says that he did so voluntarily, as it still made sense to do so, given the price and quality of the goods in question.
[72] Mr. Khorrami says that his sale of the Baxter Road pizzeria to the Defendants “was free from any pre-existing restrictions, agreements or licenses which could have impacted the sale or the independent operation of the business” by the corporate Defendant.
[73] The Defendant, Chadi Wansa, also denies that he and his fellow purchasers of the Baxter Road pizzeria were ever subject to any form of licensing agreement governing their use of the MILANO marks. Mr. Wansa states that the corporate Defendant acquired the assets of the Baxter Road pizzeria in 2002 from the Khorrami brothers’ numbered company. He has produced a copy of the asset purchase agreement, which contains no terms governing or restricting the use of the name “Milano Pizzeria”, “Milano Pizza”, the MILANO Design Mark or any other intellectual property.
[74] Mr. Wansa further asserts that since acquiring the Baxter Road location, his company “has had full control over the operations of all aspects of Milano Baxter, including the use of the business names Milano Pizza and Milano Pizzeria, the Milano Pizzeria logo, accounting practices, uniforms, menu displays, menu offerings, recipes, and the ingredients used in our pizzas and other menu items”.
[75] Mr. Wansa acknowledges that the corporate Defendant has coordinated purchasing and advertising with the independent Milano pizzeria operators, but he states that any such coordination has been on a “completely voluntary basis”. According to Mr. Wansa, the Plaintiff and the independent Milano pizzeria operators collaborate in what he describes as “a loosely organized business family and buying cooperative”. Under this arrangement, the Plaintiff and Marwan Kassis act as purchasing agents and coordinators for the independent operators and are remunerated for their work by receiving rebates from suppliers.
[76] In 2003, Mr. Wansa also acquired the domain name, milanopizzeria.ca, using that domain name and the website that he built to promote the Baxter Road location, and, later, other independent Milano pizzeria operations. He subsequently modified the website to permit on-line food orders.
[77] Mr. Wansa states that his use of the MILANO marks, including the MILANO Design Mark, as well as the milanopizzeria.ca domain name, was done over many years with the full knowledge of the Plaintiff, without any complaints from the Plaintiff regarding their use. At no time during this period were the individual or corporate Defendants party to any kind of licensing agreement with the Plaintiff, or restrictions of any kind governing the use of the MILANO marks.
[78] Mazen Kassis took over as President of the Plaintiff in 2013. Mr. Wansa says that Mazen then began trying to exercise more and more control over independent Milano pizzeria operators in an effort to generate additional income for the Plaintiff. According to Mr. Wansa, Mazen claimed that by virtue of its ownership of the MILANO Design Mark, the Plaintiff had the exclusive right to use the Milano Pizzeria business name in Canada. These claims have resulted in litigation having been commenced against the Defendants and other independent Milano pizzeria operators.
[79] With one exception, the licensing agreements that have been produced by the Plaintiff were all signed in 2012 or after, which Mr. Wansa says corroborates his claim that Mazen began trying to change the rules of the game starting in or around 2013.
[80] Mr. Wansa further states that before he became aware of Mazen’s true intentions, he was persuaded to transfer ownership of the milanopizzeria.ca domain name to the Plaintiff on the understanding that it would henceforth cover the cost of operating the website. Mr. Wansa asserts that as a condition of the transfer, the Plaintiff undertook that the Baxter Road pizzeria would never be removed from the Milano Pizzeria website. Mr. Wansa has produced an exchange of emails which he says support his claim that this commitment was made to him by the Plaintiff.
[81] According to Mr. Wansa, Mazen and Mahmoud Tabaja (another of the Defendants by Counterclaim) approached the corporate Defendant on a number of occasions seeking to have the company enter into a licensing agreement governing the use of the MILANO Design Mark. Mr. Wansa says that he refused to have the company enter into any such agreement as he believed that the Plaintiff did not own the MILANO Design Mark, and he was not prepared to give up the autonomy that the Baxter Road operation had enjoyed for some 15 years.
[82] Mazen’s effort to exert more and more control over the independent Milano pizzerias in general, and the Baxter Road pizzeria in particular, ultimately led to a breakdown of the relationship between the Plaintiff and the Defendants. One result of the fracturing of this relationship was that the Baxter Road pizzeria was removed from the Milano pizzeria website in 2016, which, Mr. Wansa says, has led to a loss of revenues on the part of the Defendants. Another result of the breakdown in the relationship between the parties was the commencement of this action.
C. Analysis
[83] From this review of the evidence adduced by each side, it is readily apparent that there is a fundamental disagreement between the parties as to whether the Defendants were ever subject to a licensing agreement - whether written or unwritten - governing their use of the MILANO marks in general, and the MILANO Design Mark in particular, and what precisely the terms of any such agreement may have been.
[84] Both sides have adduced affidavit evidence wherein their respective witnesses have stated under oath that the Defendants were, or were not, ever bound by any such agreement. The resolution of these issues thus involves an evaluation of the relative credibility of the various witnesses.
[85] As the Federal Court of Appeal observed in the TPG Technology case cited earlier, judges who hear and observe witnesses giving evidence orally at trial are better positioned to assess the witnesses’ relative credibility and to draw the appropriate inferences than are judges who must depend solely on affidavits and documentary evidence.
[86] I am satisfied that it would not be appropriate to try to resolve the question of whether there was in fact a licensing agreement governing the Defendants’ use of the MILANO marks on the basis of the record before me. There is unquestionably a genuine issue for trial in relation to this issue, one that should be decided on the basis of viva voce evidence.
[87] Having determined that there is a genuine issue for trial with respect to the existence of a licensing agreement between the parties, and the terms under which the Defendants have used the MILANO marks since 2002, it is next necessary to determine whether summary judgment can or should issue in relation to any of the arguments that have been advanced by the Defendants with respect to the validity of the MILANO marks. The first of these arguments relates to whether the MILANO Design Mark was registrable as of November 22, 2002. This issue will be addressed next.
VI. Was the MILANO Design Mark Registrable at the Date of Registration?
[88] In accordance with the provisions of section 19 of the Trade-marks Act, the registration of a trade-mark is presumed to be valid, and the Defendants accept that the onus is on them to demonstrate that the Plaintiff’s MILANO Design Mark is invalid. I agree: Tommy Hilfiger Licensing Inc. v. Produits de Qualité I.M.D. Inc., 2005 FC 10 at para. 34, [2005] F.C.J. No. 17. The full text of the relevant provisions of the Trade-marks Act is set out in Appendix “B” to these reasons.
[89] The Defendants submit that the MILANO Design Mark was not registrable as of November 22, 2002 (the date of registration of the mark) on the basis of confusion, contrary to the provisions of paragraph 18(1)(a) of the Trade-marks Act.
[90] According to the Defendants, the word “Milano” was and is a word that is primarily a name or surname of an individual who is living or has died within the preceding 30 years, contrary to the provisions of paragraph 12(1)(a) of the Trade-marks Act. The Defendants further submit that “Milano” is clearly descriptive or misleadingly misdescriptive of a place of origin of the services in association with which the word is used, contrary to the provisions of paragraph 12(1)(b) of the Trade-marks Act.
[91] In support of its contention that the MILANO Design Mark was not registrable, the Defendants point to statements that were made by counsel for the Plaintiff during the prosecution of the MILANO Design Mark. These comments were made in response to concerns that were raised by the Registrar of Trade-marks as to potential confusion with pre-existing trademark No. TMA380,997.
[92] In his response, counsel for the Plaintiff observed that the word ‘MILANO’ “is actually a common trade name in association with restaurants and cafes in Canada”. The Plaintiff further noted that this Court has held that “MILANO” is merely a geographic name with no secondary meaning and that it cannot be monopolized and remains in the public domain: Milano Dining Room & Lounge Ltd. et al. v. Milano Express (Medicine Hat) Ltd. (1987), 15 C.P.R. (3d) 272, [1987] F.C.J. No. 413.
[93] The Defendants argue that the Plaintiff cannot have it both ways. Having obtained registration of the MILANO Design Mark by arguing that the word “MILANO” was clearly descriptive and not distinctive and thus cannot be monopolized, the Plaintiff cannot now claim that it has exclusive rights to the MILANO marks, including the MILANO Design Mark. At the very least, the Defendants say, the MILANO Design Mark is invalid under paragraph 18(1)(a) of the Trade-marks Act, as it would not have been registrable at the date of registration.
A. Is there a Genuine Issue for Trial with Respect to the Registrability Issue?
[94] The question of whether the MILANO Design Mark was registrable as of November 22, 2002 does not involve any issues of witness credibility. It also does not turn on whether or not there was a valid licensing agreement between the parties governing the Defendants’ use of the MILANO Design Mark. Consequently, I am satisfied that it is appropriate to resolve this issue on a motion for summary judgment.
[95] The difficulty with the Defendants’ position is that almost the entire focus of its submissions on this issue was on the words contained in the MILANO Design Mark, rather than on the design elements of the Mark. There is, however, more to the MILANO Design Mark than just the words “Milano Pizzeria”. Indeed, as was noted earlier, the Plaintiff specifically disclaimed the use of the word “pizzeria” in relation to the MILANO Design Mark, and it does not now claim ownership of the word “Milano” per se, as a trade-mark or otherwise.
[96] In addition to the words “Milano Pizzeria”, there are also design components to the Plaintiff’s MILANO Design Mark that render the mark as a whole distinctive. These include the layout and font of the words, as well as the pizza slice appearing in the letter “O” of “Milano”, which is the most distinctive element of the MILANO Design Mark.
[97] As the Federal Court observed in the Mila