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TRADEMARKS - Infringement - Passing off and unfair competition - Accounting of profits

Monday, February 01, 2021 @ 9:17 AM  

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Appeal by Holiday Group from a Federal Court judgment ordering the expungement of the respondent’s registered trademarks but dismissing the appellant’s claim for damages. After the respondent’s trademarks were registered, this court found the trademarks were confusing with each of the appellants’ trademarks. In 2017, this court found the respondent liable for infringement and passing off. The Federal Court found that there was no basis to find the respondent’s registered trademarks invalid ab initio. The appellant argued that the Federal Court erred and should have found that the infringing marks had always been invalid and never registrable, therefore disentitling the respondent from relying on s. 19 of the Trademarks Act and entitling the appellant to financial compensation from the moment the respondent started using the infringing trademarks.

HELD: Appeal allowed. The respondent’s registered trademark did not give rise to liability in damages or profits for the period arising prior to it being struck from the Register because of the protection afforded to it under s. 19 of the Act. In expungement proceedings, liability for damages was engaged only after the Federal Court had struck out the trademark from the Register. Absent a finding of fraud, wilful misrepresentation or bad faith in the application for registration, the owner of the registered trademark was not liable for any damages accruing prior to the expungement of its trademark. Infringement and passing off were, however, separate and distinct causes of action that gave rise to an order of damages. To the extent the passing off complained of by the appellant took place while the respondent’s registrations were in force, the jurisprudence indicated that the registrations of the trademarks were a complete defence to the action of passing off. As the passing off finding was not appealed, that finding was fully determined and could not be relitigated. Monetary compensation should be awarded based on this court’s 2017 decision on passing off. The appellant was entitled to an accounting of profits to be quantified by way of reference.

Group III International Ltd. v. Travelway Group International Ltd., [2020] F.C.J. No. 1185, Federal Court of Appeal, J.D.D. Pelletier, Y. de Montigny and M. Rivoalen JJ.A., December 9, 2020. Digest No. TLD-February12021001