The BCCA takes a Peck out of Registered Trademark Rights

Owners of registered trademarks are granted powerful rights under the Trade-marks Act. For example, section 19 of the Act reads:

19. Subject to sections 21, 32 and 67, the registration of a trade-mark in respect of any wares 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 wares or services.

 Courts have treated section 19 as an affirmative right to use a registered trademark and have even suggested that a trademark registration serves as a complete defence to a passing off action: Remo Imports Ltd. v. Jaguar Cars Ltd., 2007 FCA 258; Molson Canada v. Oland Breweries Ltd. (2002), 9 O.R. (3d) 607; Chemicals Inc. and Overseas Commodities Ltd. V. Shanahan’s Ltd. (1951), 15 C.P.R. 1 (B.C.C.A.). If a competitor has pre-existing but unregistered trademark rights, any recourse it seems to have against the owner of a confusing registered trademark must include an attack on the validity of the registration.

However, can a challenger to the user of a registered trademark obtain an interlocutory injunction preventing the owner of the registration from using the trademark? Or is the affirmative effect of section 19 strong enough to shield the owner from such injunctions? At least one Federal Court case suggests that a registered trademark owner might be enjoined from the use of its registered mark until trial: Advantage Car & Truck Rentals v. 1611864 Ontario Inc., 2005 FC 325. But in Advantage, the motion for an interlocutory injunction was dismissed on the basis that the plaintiff did not show irreparable harm, part of the test for interlocutory injunctions.

A recent B.C. decision appears to confirm that once the validity of a registered trademark is attacked, an interlocutory injunction can issue prohibiting the owner from using its registered trademark. In Woodpecker Hardwood Floors (2000) Inc. v. Wiston International Trade Co., Ltd., 2013 BCCA 553, the B.C. Court of Appeal refused leave to appeal such an interlocutory injunction.

Woodpecker is in the business of selling hardwood flooring and had been using the name “WOODPECKER” since at least 2000, but it never registered its name as a trademark.

Wiston is a competitor of Woodpecker and has a store that is located approximately 1.4 kilometers away from Woodpecker’s store. In January 2013, Winston successfully registered two trademarks, “WOODPECKER” (TMA840289) and “WOODPECKER & Design” (TMA840290). A declaration of use was filed for each trademark on January 15, 2013.

In May 2013, Woodpecker sent a “cease and desist” letter to Wiston demanding that it cease using the WOODPECKER trademarks. Wiston refused to comply. Woodpecker then commenced a passing off action against Wiston on August 13, 2013, also seeking a declaration that Wiston’s registered WOODPECKER marks are invalid. Ten days after commencing the action, Woodpecker applied for an interlocutory injunction prohibiting Wiston from using the name “WOODPECKER”.

Wiston argued that section 19 was a full defence to a passing off action and that Woodpecker’s sole recourse was to expunge the WOODPECKER trademarks. Mr. Justice Silverman rejected this argument by noting that section 19 of the Trade-marks Act says “unless shown to be invalid” rather than “unless expunged” or “until expunged”. He cited Advantage in support of the position that a claim can be advanced before a trademark is expunged.

Wiston also argued that any damage suffered by Woodpecker could be compensated by money and therefore Woodpecker had not established the irreparable harm needed to underlie an interlocutory injunction. Interestingly, Mr. Justice Silverman rejected this argument and stated:

[28] The longer the defendants are permitted to use marks confusingly similar to the “Woodpecker” marks, the more their use becomes prevalent amongst the public – exacerbating the harm, and making it more difficult to unscramble what business losses are due to this confusion and what losses are due to the traditional kinds of business considerations and competition in the marketplace.

 Finding that a serious question to be tried existed and that the balance of convenience favoured Woodpecker, Mr. Justice Silverman held that Woodpecker met the test for an interlocutory injunction and granted the injunction.

The BC Court of Appeal’s decision to refuse leave to appeal suggests that at least for the time being, superior courts may grant an interlocutory injunction that prevents an owner from using its registered trademark, despite the affirmative language in section 19 of the Trade-marks Act.