T-203-75
Benjamin Distribution Ltd., Montreal News Deal
ers Supply Company Ltd., American Distributors
Service Company Ltd. (Plaintiffs)
v.
Les Distributions Eclair Ltée (Defendant)
Trial Division, Walsh J.—Montreal, February 24,
Ottawa, February 27, 1975.
Jurisdiction—Motion to strike statement of claim—Wheth-
er Court has jurisdiction—Plaintiffs, distributors of maga-
zines—Allege defendant disseminating brochure portraying
itself as exclusive distributor of said magazines—Whether
false and misleading statements constituting unfair trade prac-
tice—Plaintiffs seeking injunction—Whether type of passing
off contemplated by Trade Marks Act—Trade Marks Act,
R.S.C. 1970, c. T-10, s. 7(a), (b) and (e) —Federal Court Act, s.
20.
Defendant moved to strike plaintiffs' statement of claim,
maintaining that the Court lacked jurisdiction. Plaintiffs are
magazine distributors to retail outlets and also provide instan
taneous sales reports to the publishers. Plaintiffs allege that
defendant has been distributing a brochure portraying itself as
exclusive distributor of said magazines, and stating that it can
supply sales reports faster than anyone else. Plaintiffs contend
that these statements constitute unfair competition under the
Trade Marks Act, and invoke that Act, common law, and
equity for an injunction against the distributor of the brochure.
Held, granting the motion to strike the statement of claim,
the fact that plaintiffs may have a right of action does not
necessarily give the Court jurisdiction if the proceeding arises
from a claim under common law for unfair competition, or
business practice contrary to honest industrial or commercial
usage in Canada unless such claims are connected with the
Trade Marks Act. This would constitute, at most, an exag
gerated advertising claim. There is no suggestion that there is
any distinguishing mark which sets plaintiffs' services apart
from those performed by others within the meaning of section
7(a) of the Act (" ... tending to discredit the business, wares or
services of a competitor."). The purpose of the Trade Marks
Act is to prevent only unfair competition; when two parties
advertise the same services, such confusion as may result is not
the type of passing off contemplated by section 7(b). And,
while section 7(e) can stand alone, plaintiffs were unable to
find any jurisprudence granting an injunction with relation to
"services". While section 7 does refer to "services" as well as
objects, its aim is the protection of services with which the use
of a trade mark is associated. There is nothing in the case to
distinguish the services of plaintiffs from those of anyone else.
Therapeutic Research Corporation Limited v. Life Aid
Products Limited [1968] 2 Ex.C.R. 605, distinguished.
MOTION to strike statement of claim.
COUNSEL:
L. Sculman for plaintiffs.
J. Greenstein for defendant.
SOLICITORS:
Tinkoff, Seal, Shaposnik & Moscowitz,
Montreal, for plaintiffs.
Geoffrion & Prud'homme, Montreal, for
defendant.
The following are the reasons for judgment
rendered in English by
WALSH J.: Defendant moves to strike plaintiffs'
statement of claim or subsidiarily to strike there
from certain allegations and conclusions which
allegedly do not disclose a reasonable cause of
action and are frivolous or vexatious and an abuse
of the process of the Court and finally with respect
to paragraphs 4 and 5 of plaintiffs' statement of
claim that if they are not struck, plaintiffs be
ordered to furnish particulars with respect to them
and that the delay for filing a defence be suspend
ed for such delay as the Court may see fit.
Defendant's primary objection to the entire
statement of claim is that this Court has no juris
diction over the cause of action and if this ground
is sustained then there will be no need to decide
the merits of the subsidiary conclusions.
For the purposes of the motion to strike, the
allegations in the pleading it is sought to strike
must be deemed to be true and the Court has to
determine whether this being so, they can give rise
to the right claimed.
Without reciting the allegations of plaintiffs'
statement of claim in detail, it can be stated that it
alleges that plaintiffs have, for many years, been
engaged in the distribution of magazines and peri
odicals in both English and French in the Province
of Quebec and have acquired the exclusive rights
for the distribution inter alia of Reader's Digest,
Maclean's Magazine and Chatelaine in their Eng-
lish versions which they have been distributing for
thirty-five years in addition to distributing a maga
zine known as Sesame Street with exclusive distri
bution rights since September 1970, and also a
periodical known as Salut les Copains and many
comic books emanating from the United States. It
is further alleged that they have furnished the
distribution services to the supermarket grocery
chain operated by Steinberg's Limited for twenty-
five years as well as to three thousand other retail
outlets, and that they furnish instantaneous sales
reports to the publishers through access to central
computing facilities. They allege that defendant
has been disseminating throughout Canada and
the world an advertising brochure in which it
portrays itself as the exclusive distributor of the
magazines known as Maclean's Magazine, Chate-
laine, Reader's Digest, Sesame Street, and Salut
les Copains'. The brochure further refers to the
fact that it can supply its clients with sales reports
faster than anybody else, that the growth of super
markets and shopping centres has altered the
buying habits of Quebecers and that defendant
was the first to set up points of sales to tap this
new market, and that it distributes a number of
America's favourite lines of comic books. Plaintiffs
complain that they furnish their clients with sales
reports with at least the same dispatch as defend
ant, that they were distributing the magazines to
supermarkets before defendant came into existence
and that they are the distributors of seven major
comic book lines whereas defendant distributes
only one line of American comic books. They
contend that these false and misleading statements
constitute unfair competition within the provisions
of the Trade Marks Act 2 , that they have acquired
a reputation for distribution in a reliable and
regular manner, and that defendant is guilty of
acts calculated to deceive the public and to pass
off its distribution services as being sanctioned and
authorized by plaintiffs who hold the exclusive
rights to distribute the magazines and periodicals
in question. They invoke common law, equity and
the provisions of section 7(a), (b), (c) and (e) of
the Trade Marks Act, seek an injunction restrain
ing defendant from the dissemination of the adver-
' It should be pointed out that the advertising brochure
produced does not indicate any claim by defendant to being the
"exclusive" distributor.
2 R.S.C. 1970, c. T-10.
tising brochure in question, directing public atten
tion to its services in a way as to be likely to cause
confusion in Canada between its distribution ser
vices and those of plaintiffs, doing any acts or
adopting any business practice contrary to honest
industrial or commercial usage in Canada and
likely to injure plaintiffs, as well as an order for
delivery up for destruction of all the advertising
brochures, for the production of names and
addresses of all persons to whom copies of the
brochure have been sent, and for damages.
If plaintiffs have the exclusive distribution rights
for the magazines in question in the Province of
Quebec as they claim, then they may well have a
legitimate cause of action against defendant,
although one might wonder why they do not
choose to bring proceedings against the publishers
if they have such exclusive rights since it is evident
that defendant expects to encounter no difficulty
in having access to these magazines for distribu
tion by it, if in fact it is not already distributing
same. However, that is not an issue which is before
me. The fact that plaintiffs may have a right of
action does not necessarily give jurisdiction to this
Court if the proceeding arises from a claim under
the common law for unfair competition or business
practice contrary to honest industrial or commer
cial usage in Canada unless such claims arise out
of, or are in some way connected with, the Trade
Marks Act. Section 20 of the Federal Court Act
gives the Trial Division:
... concurrent jurisdiction in all other cases in which a remedy
is sought under the authority of any Act of the Parliament of
Canada or at law or in equity, respecting any patent of
invention, copyright, trade mark or industrial design. [Italics
mine.]
Plaintiffs claim that this Court has jurisdiction by
virtue of section 7 of the Trade Marks Act. In
particular paragraphs (a), (b) and (e) read as
follows:
7. No person shall
(a) make a false or misleading statement tending to discredit
the business, wares or services of a competitor;
(b) direct public attention to his wares, 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 wares, services or business and the wares,
services or business of another;
(e) do any other act or adopt any other business practice
contrary to honest industrial or commercial usage in Canada.
Attention was particularly directed in argument to
the fact that paragraphs (a) and (b) referred to
"services" as well as business and wares. In the
present case there is no suggestion that defendant
is passing off other magazines in substitution for
the magazines in question, plaintiffs' grievance
arising out of the fact that defendant indicates in
its advertising brochure that it can provide the
same services as those which plaintiffs have been
furnishing for many years and, in fact, even
implies that it can supply sales reports faster than
anybody else, and that it was the first to tap the
market for these publications in supermarkets in
Quebec. Without going into the merits of the case,
it would appear that this would constitute at most
an exaggerated advertising claim such as one finds
in advertisements for all sorts of products and
could not be interpreted as "tending to discredit
the business affairs or services of a competitor"
within the meaning of section 7(a) of the Act.
The word "services" is not defined in the Act,
but the word "trade mark" is defined as
(a) a mark that is used by a person for the purpose of
distinguishing or so as to distinguish wares or services manu
factured, sold, leased, hired or performed by him from those
manufactured, sold, leased, hired or performed by others,
(b) a certification mark,
(c) a distinguishing guise, or
(d) a proposed trade mark;
"Certification mark" is itself defined in a manner
that indicates without any doubt that it refers to a
specific mark which is used with respect to the
wares or services of a defined standard so as to
distinguish them from wares or services that are
not of such a defined standard. Similarly, "distin-
guishing guise" refers to the shaping of wares or
their containers or a mode of wrapping which
distinguishes the wares or services from those sold
or performed by others. There is no suggestion
here that there is any distinguishing mark which
distinguishes the distribution services performed
by plaintiffs from those performed by others.
While the services may be very efficiently and
competently performed, there is nothing unique
about the manner in which they are performed
which is being copied by defendant. Anyone can
perform similar distribution services provided they
can obtain the source of supply of the magazines
to be distributed, have the necessary financing,
equipment, experience and competency to render
the type of services which plaintiffs allegedly
render.
The purpose of the Trade Marks Act is not to
prevent competition but only unfair competition.
When two people advertise that they can perform
the same services, this may in one sense of the
word cause confusion among potential customers
but I do not find it to be the type of confusion or
passing off contemplated by section 7(b) of the
Trade Marks Act.
If plaintiffs are to bring the matter within the
Trade Marks Act they would have to do so by
virtue of the rather generalized provisions of sec
tion 7(e). Reference was made to the judgment of
Noël J., as he then was, in the case of Therapeutic
Research Corporation Limited v. Life Aid Prod
ucts Limited' which held that section 7(e) of the
Trade Marks Act can stand by itself and does not
necessarily have to deal with matters ejusdem
generis with those covered in paragraphs
(a),(b),(c) and (d) of section 7 as had previously
been thought following the decision in Eldon
Industries Inc. v. Reliable Toy Co. Ltd. 4 . In the
Therapeutic Research Corporation Limited case,
however, the defendant had used pictures of an
object, being an oxygen mask produced by plain
3 [1968] 2 Ex.C.R. 605.
4 28 Fox Pat. C. 163; 31 Fox Pat. C. 186.
tiffs, with the label of the defendant corporation
stuck over the label of the plaintiffs. The judgment
stated at page 607:
The statements and representations contained in defendant's
publicity leaflets (of which, according to counsel, they still have
six thousand) are, therefore, clearly deceptive and although
such a course of action may not fall under the prohibition
contained in subsections (a), (b), (c) or (d) of section 7 of the
Trade Marks Act it is, in my view, covered by subsection (e)
thereof in that such statements or representations constitute a
deceptive practice as representing to the public as the defend
ant's device, a device which was produced by somebody else
and which also is different from its own device. Such a deliber
ate and dishonest practice, in addition to being confusing,
deceiving and misleading to the public is also contrary to honest
commercial usage in this country.
This judgment therefore dealt with an object and
not a service and, in fact, plaintiffs concede that
they have been unable to find any jurisprudence in
which an injunction has been granted under the
provisions of the Trade Marks Act for unfair
competition or business practices contrary to
honest industrial or commercial usage in Canada
with relation to services. Fox, The Canadian Law
of Trade Marks and Unfair Competition, 3rd ed.,
has this to say at page 64:
Under the common law and the earlier statutes only marks
used to identify wares were regarded as trade marks; the
creation of trade mark rights in marks used to identify services
thus constitutes an innovation in Canadian law. Use of a trade
mark is now deemed to take place in association with services if
it is used or displayed in the performance or advertising of such
services. "Use in Canada" of a trade mark in respect of services
is not established by mere advertising of the trade mark in
Canada coupled with performance of the services elsewhere but
requires that the services be performed in Canada and that the
trade mark be used or displayed in the performance or advertis
ing in Canada of such services.
It would appear therefore that although section 7
of the Act refers to "services" as well as to wares
or business, it has in mind the protection of ser
vices in connection with which the use of a trade
mark is associated. There is no such trade mark in
the present case or anything to distinguish plain
tiffs' services from those of anyone else. I therefore
find that this Court does not have jurisdiction to
entertain the proceedings brought by plaintiffs
herein.
ORDER
Defendant's motion to strike plaintiffs' state
ment of claim is granted, with costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.