T-3011-78
Valle's Steak House (Plaintiff)
v.
Gérard Tessier and Adrien Tessier, carrying on
business as "Valle's Steak House Restaurant of
Montreal Reg'd" (Defendants)
Trial Division, Marceau J.—Montreal, June 9 and
10; Ottawa, July 14, 1980.
Trade marks — Infringement and passing off — Plaintiff
an American corporation operating a chain of restaurants in
the U.S. under the name "Valle's Steak House" or "Valle's",
is registered owner in Canada of the trade mark "Valle's" —
Defendants, operators of a restaurant in Montreal identifying
their establishment as "Valle's" since November 1972
Whether plaintiff has made its mark known in Canada prior to
November 1972 — Whether plaintiffs trade mark "well
known in Canada" — Trade Marks Act, R.S.C. 1970, c. T-10,
ss. 3, 5, 7(b),(c),(d), 14(1), 16(1), 19, 53, 55.
This is an action for infringement and passing off whereby
plaintiff, an American corporation operating, since 1950 a
chain of restaurants in the United States under the name
Valle's Steak House or Valle's, seeks to obtain relief by
injunction and the recovery of damages. In 1973, plaintiff
submitted to the Registrar of Trade Marks of Canada an
application to register its trade mark Valle's, mentioning that it
had made its mark known in Canada since 1955. This applica
tion was approved and, since 1977, plaintiff is the registered
owner in Canada of the trade mark Valle's. The defendants
have been operating a restaurant in Montreal, since November
1972, under the name of Valle's Steak House Restaurant of
Montreal and identifying their establishment as Valle's exactly
as in plaintiffs trade mark, notwithstanding the dismissal, by
the Registrar of Trade Marks, of their application to register
the mark Valle's filed in November 1972. One of the funda
mental principles involved in order to decide on the validity of
the respective claims of the parties states that the "making
known" in Canada of a trade mark used abroad is equivalent to
its use in Canada. The question is whether the plaintiff had
made its mark known in Canada prior to November 1972
pursuant to section 5 of the Trade Marks Act and whether its
trade mark was sufficiently "well known in Canada" to comply
with the requirements of that section.
Held, the action is allowed. Section 5 is peremptory in its
application and the provision it contains is one of substance and
not only of evidence. The purpose of the section is to make clear
what the expression "make known" a trade mark means within
the Act. The presence after the words "is deemed" and "est
reputée" of the words "only if' and "seulement si" does not
admit of any other interpretation. The suggestion by plaintiff
that section 5 could be interpreted as designed simply to give
evidentiary effect to the means referred to in it, without thereby
excluding the validity of other means which might be used to
make a trade mark known thus fails. Within the specific limits
of that section, the evidence here was quite sufficient to demon
strate that, before November 1972, plaintiff had advertised its
services in connection with its mark in several publications
which, although American, are circulated in Canada and in a
number of radio or television broadcasts received in Canada. It
is clear that the means of making the mark known in Canada,
provided for by section 5, were fully used here. However, in
order to be considered "well known in Canada", it is not
enough for a mark to be known merely within the boundaries of
some locality; it must be known in "a substantial part" of the
country. Here, the plaintiff's trade mark was known in the
eastern Canadian provinces, and in Quebec: clearly, these
constitute a sufficiently "substantive" part of the country to
meet the requirements of section 5.
Robert C. Wian Enterprises, Inc. v. Mady [1965] 2
Ex.C.R. 3, considered. Marineland Inc. v. Marine Won
derland [1974] 2 F.C. 558, considered. Williamson Candy
Co. v. W. J. Crothers Co. [1924] Ex.C.R. 183, considered.
E. & J. Gallo Winery v. Andres Wines Ltd. [1976] 2 F.C.
3, referred to.
ACTION.
COUNSEL:
R. Hughes and K. McKay for plaintiff.
E. Gagnon for defendants.
SOLICITORS:
D. F. Sim, Q.C., Toronto, for plaintiff.
E. Gagnon, Montreal, for defendants.
The following is the English version zof the
reasons for judgment rendered by
MARCEAU J.: This action for infringement of a
trade mark and passing off, which seeks to obtain
relief by injunction and the recovery of damages,
has like all actions of this type given rise to
somewhat lengthy evidence. However, its difficul
ties do not consist so much .in assessing the tes
timony and determining the facts as in the defini
tion of the rules and principles of law applicable to
the case at bar and the consequences that are to be
derived therefrom in determining the value of the
parties' respective claims. This may be seen from a
review of the fundamental facts and an analysis of
the principal allegations in the written pleading.
Plaintiff is an American corporation operating a
chain of restaurants in the United States. It was
incorporated in 1950 to carry on the business
founded some ten years earlier in the State of
Maine by one Donald Vallé; it has grown steadily
to the point where it now operates more than thirty
restaurants scattered throughout the East Coast
States from Maine to Florida. It has been a public
company since 1968, and its turnover of over
$60,000,000 puts it among the largest businesses
of the kind in the United States. Plaintiff has
always operated under its present name of Valle's
Steak House, and has always used in its advertis
ing, in identifying its premises and in promoting its
services—on which it has spent considerable
amounts over a period of years—the trade marks
Valle's or Valle's Steak House, with the word
"Valle's" written in the Gothic old English
manner. In fact, it has been the owner since 1969
of five trade marks registered in the United States,
all having to do with the word "Valle's", the last
registration, No. 869,532, dated May 13, 1969,
being precisely that of the word "Valle's", and in
connection obviously with restaurant services.
In June 1973, although it had never operated a
restaurant in Canada, plaintiff submitted to the
Registrar of Trade Marks of Canada an applica
tion to register its trade mark Valle's. It naturally
maintained that its mark, registered in the United
States and used by it for several years, was not
without distinctive character within the meaning
of section 14(1) of the Trade Marks Act (R.S.C.
1970, c. T-10),' and it mentioned that it had made
its mark known in Canada since 1955. It took four
' 14. (1) Notwithstanding section 12, a trade mark that the
applicant or his predecessor in title has caused to be duly
registered in his country of origin is registrable if, in Canada,
(a) it is not confusing with a registered trade mark;
(b) it is not without distinctive character, having regard to all
the circumstances of the case including the length of time
during which it has been used in any country;
(c) it is not contrary to morality or public order or of such a
nature as to deceive the public; or
(d) it is not a trade mark of which the adoption is prohibited
by section 9 or 10.
years to compile the evidence required by the
Registrar and its application was finally approved.
Since July 8, 1977, plaintiff has been the regis
tered owner in Canada (registration No. 221,667)
of the trade mark Valle's in connection with res
taurant services. However, its restaurants are still
all located in the United States.
Defendants Tessier are brothers. In November
1972, the two brothers had the idea of operating a
restaurant in Montreal known as Valle's Steak
House Restaurant of Montreal. In accordance
with article 1834 of the Civil Code of the Province
of Quebec and the Companies and Partnerships
Declaration Act (R.S.Q. 1964, c. 272), they
caused a declaration to be registered by the Pro-
thonotary of the Superior Court for the district of
Montreal to the effect that they were henceforth
doing business together under the name and firm
name of Valle's Steak House Restaurant of Mon-
treal Reg'd, and opened their restaurant in a
building on St. Catherine Street in the downtown
area. 2 A few days later, on November 8, 1972,
through an agent, they submitted to the Registrar
of Trade Marks an application to register the
mark Valle's, with Gothic lettering, which they
altered shortly afterwards, believing that this
would make it more acceptable, to Valle's Steak
House, but the Registrar promptly refused, first
because the mark, consisting primarily of a family
name, was not registrable (s. 12(1)(a) of the Act),
and secondly because the applicants did not appear
to be the persons entitled to the registration under
the terms of an application by an American com
pany (obviously plaintiff, as we have seen) con
cerning a similar mark. Defendants had to with
draw their application, but they did not think they
were thereby required to change anything in their
operation. Since November 1972, therefore,
defendants have operated their restaurant in Mon-
treal under the name of Valle's Steak House
Restaurant of Montreal, and identified their es
tablishment using the name Valle's exactly as in
plaintiffs trade mark, and they intend to continue
doing so unless they are prevented by an order of
the Court.
2 In fact the partnership initially included a third partner,
who left after a year.
Plaintiff instituted its action in June 1978, a few
months after it obtained registration of its mark in
Canada. In it, it claimed the reliefs which this
Court is empowered to grant in accordance with
sections 53 and 55 of the Trade Marks Act, 3 and
put forward two grounds for relief. First, it main
tained that since 1972 defendants have infringed
paragraphs (b), (c) and (d) of section 7 of the Act,
which in prohibiting certain acts of unfair compe
tition, including primarily that known in the
common law as "passing off', state the following:
7. No person shall
(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;
(c) pass off other wares or services as and for those ordered
or requested;
(d) make use, in association with wares or services, of any
description that is false in a material respect and likely to
mislead the public as to
(i) the character, quality, quantity or composition,
(ii) the geographical origin, or
(iii) the mode of the manufacture, production or
performance
of such wares or services;
It naturally also maintains, since its mark is now
registered in Canada, that since 1977 defendants
have been infringing the exclusive right conferred
on it by section 19 of the Act in the strictest terms:
19. Subject to sections 21, 31 and 67, the registration of a
trade mark in respect of any wares or services, unless shown to
be invalid, gives to the owner the exclusive right to the use
throughout Canada of such trade mark in respect of such wares
or services.
3 53. Where it is made to appear to a court of competent
jurisdiction that any act has been done contrary to this Act, the
court may make any such order as the circumstances require
including provision for relief by way of injunction and the
recovery of damages or profits, and may give directions with
respect to the disposition of any offending wares, packages,
labels and advertising material and of any dies used in connec
tion therewith.
55. The Federal Court of Canada has jurisdiction to enter
tain any action or proceeding for the enforcement of any of the
provisions of this Act or of any right or remedy conferred or
defined thereby.
However, defendants deny that either of the two
causes of action cited can be maintained against
them. First, they argue section 7 does not apply
because (here I am taking the gist of the allega
tions of the defence, leaving aside several proposi
tions which are manifestly irrelevant and inappli
cable) plaintiff, a foreign company doing business
exclusively in the United States, cannot claim an
exclusive right to the use in Canada of the word
"Valle's" as a name or trade mark; further,
because when they registered their firm name and
began using their name, the word "Valle's" was
not registered as a trade mark in Canada, and was
not used by anyone providing restaurant services in
Canada, so that the adoption of this name by them
could not have had the effect of creating confusion
in the public mind between their business and that
of anyone else doing business in Canada. Second,
they argue that the registration of the trade mark
Valle's in 1977 on plaintiff's behalf was unlawful
and should be declared invalid (as indicated in
their counterclaim), for not only was the mark not
registrable as it was a family name, as the Regis
trar mentioned in rejecting their own application,
but in any case plaintiff was not the person en
titled to obtain registration of it, since it could
create confusion with the business name they had
themselves been using for a long time.
The basic facts are thus relatively straightfor
ward and the two causes of action clearly estab
lished. What is important is to determine the
applicable principles.
In my view, in order to decide on the validity of
the respective claims of the parties, it is necessary
to start from three fundamental principles. The
first general principle is so obvious that it would be
superfluous to state it, if it were not for the fact
that from reading the written defence the Court
has the impression that defendants have forgotten
it: a foreign company, even if it is doing business
abroad exclusively, may nonetheless acquire rights
in Canada and may maintain them in Canadian
courts just as any Canadian company may do. The
second, which relates to the area we are consider
ing, is also obvious, but here it appears to be
plaintiff which has not taken it into account,
assuming that it could not react against the use of
its mark in Canada without its consent before
having formally had it registered in Canada. The
existence of a trade mark in law does not in any
way depend on its registration, and the rights to a
trade mark are acquired by adoption and use of
the mark in relation to goods or services, not by its
registration; registration confirms the owner's
rights to exclusive use of its mark throughout
Canada and facilitates their legal recognition by
simplifying the evidence required of it, but the
rights themselves exist prior to registration. The
third principle I should note is that which Parlia
ment included in our law to give effect to obliga
tions which Canada has undertaken pursuant to
the international agreement for protection of
industrial property, and under which merely the
"making known" in Canada of a trade mark used
abroad is equivalent to its use in Canada. Thus,
section 3 of our Trade Marks Act provides:
3. A trade mark is deemed to have been adopted by a person
when he or his predecessor in title commenced to use it in
Canada or to make it known in Canada or, if he or such
predecessor had not previously so used it or made it known,
when he or such predecessor filed an application for its registra
tion in Canada.
It is apparent that the result of applying these
three principles to the case at bar is that plaintiff
acquired ownership rights to its trade mark in
Canada, rights which Canadian courts are capable
of protecting, if and, if so, as soon as it has made
its mark known in Canada and so long as it did not
abandon it. It follows from this that since defend
ants began their operations in November 1972, the
two causes of action submitted by plaintiff are
valid to the extent that it shows that it had made
its mark known in Canada before November 1972.
If its contention in this regard is a valid one, it is
clear that defendants have appropriated for pur
poses of deriving profit therefrom a mark adopted
by someone else in Canada, thereby clearly
infringing the provisions of paragraphs (b), (c) and
(d) of section 7, and it is equally clear that the
registration which it obtained in 1977 is unassail
able since its mark, which has been used for such a
long time in the United States, had the distinctive
character required by section 14, and that it is the
person entitled to obtain registration thereof in
Canada as it had made the mark known before
defendants copied it (s. 16(1)). °
Accordingly, everything turns on the question of
whether plaintiff had made its mark known in
Canada prior to November 1972, in connection
with the restaurant services which it offered in the
United States. The Registrar has already replied
in the affirmative, but his findings are disputed
and the question must therefore be re-examined.
Section 5 of the Trade Marks Act reads as
follows:
5. A trade mark is deemed to be made known in Canada by a
person only if it is used by such person in a country of the
Union, other than Canada, in association with wares or ser
vices, and
(a) such wares are distributed in association with it in
Canada, or
(b) such wares or services are advertised in association with
it in
(i) any printed publication circulated in Canada in the
ordinary course of commerce among potential dealers in or
users of such wares or services, or
(ii) radio broadcasts, as defined in the Radio Act, ordinar
ily received in Canada by potential dealers in or users of
such wares or services,
and it has become well known in Canada by reason of such
distribution or advertising.
It may be worth considering the scope of this
section for a moment. Counsel for the plaintiff
suggested that the use of the words "is deemed" in
the English version was typical of a rule of evi-
16. (1) Any applicant who has filed an application in
accordance with section 29 for registration of a trade mark that
is registrable and that he or his predecessor in title has used in
Canada or made known in Canada in association with wares or
services is entitled, subject to section 37, to secure its registra
tion in respect of such wares or services, unless at the date on
which he or his predecessor in title first so used it or made it
known it was confusing with
(a) a trade mark that had been previously used in Canada or
made known in Canada by any other person;
(b) a trade mark in respect of which an application for
registration had been previously filed in Canada by any other
person; or
(c) a trade name that had been previously used in Canada
by any other person.
dente, and that the provision could be interpreted
as designed simply to give evidentiary effect to the
means referred to in it, without thereby excluding
the validity of other means which might be used to
make a trade mark known. Based on this sugges
tion, he submitted evidence to the effect that a
great many Canadians had probably visited one or
more of plaintiffs restaurants or seen billboards
relating to them on trips to the United States. I do
not accept this suggestion. In my view, the section
is peremptory in its application, and the provision
it contains is one of substance and not only of
evidence. The purpose of the section is to make
clear what the expression "make known" a trade
mark means within the Act. The presence after the
words "is deemed" and "est réputée" of the words
"only if" and "seulement si" does not admit of any
other interpretation. As such, the rule appears to
me to be quite understandable: can it reasonably
be admitted that by setting up billboards abroad or
by serving Canadian travellers in its establish
ments abroad a foreign firm can be regarded as
having made itself known in Canada? However,
counsel had no need of this suggestion, which I
regard as invalid. I am in fact of the opinion that
within the specific limits of section 5, the evidence
was quite sufficient to demonstrate that, before
November 1972, plaintiff had advertised its ser
vices in connection with its mark in several publi
cations which, although American, are circulated
in Canada (newspapers, magazines, specialized
pamphlets for travellers and so on) and in a
number of radio or television broadcasts received
in Canada. The specific testimony, supported by
several exhibits, of Marie Lise Andrée Logan, a
travel agent employed by the "United States
Travel Service" in Montreal, and of Daniel G.
Davis III, a vice-president of plaintiff but also an
undisputed expert on advertising, are especially
conclusive in this regard, and could be cited in
their entirety, if it were necessary to do so. Coun
sel for the defendants devoted considerable energy
to finding affirmations of hearsay in the state
ments of these two witnesses, but they were
experts and these affirmations could only be used
to impugn the credibility of their opinions (E. & J.
Gallo Winery v. Andres Wines Ltd. [ 1976] 2 F.C.
3 (F.C.A.) per Thurlow J. (as he then was)), and I
do not consider that this credibility can be
disputed.
I therefore have no doubt that these means of
making the mark known in Canada, provided for
by section 5, were fully used here. However, one
difficulty remains. While the evidence as presented
may readily be used as a basis for concluding that
plaintiffs trade mark was known in the eastern
Canadian provinces, and in particular in Quebec,
it does not permit to say that it was known else
where in Canada, and the question may then arise
as to whether, in spite of this, it was sufficiently
"well known in Canada" to comply fully with the
requirements of section 5. I do not regard this as a
serious difficulty, as I do not think this question
can be given any but an affirmative answer. I
know that in Robert C. Wian Enterprises, Inc. v.
Mady [1965] 2 Ex.C.R. 3, and in Marineland Inc.
v. Marine Wonderland [1974] 2 F.C. 558, my
brother Cattanach J. had observations which,
taken out of context, leave the impression that, in
his opinion, for a trade mark to be regarded as
"well known in Canada" within the meaning of
section 5 it must be known throughout the country.
However, I believe that, put back into their con
text, these observations do not have the scope that
might at first sight be ascribed to them. As I
understand it, the opinion of my brother is that, in
order to be considered "well known in Canada", it
is not enough for a mark to be known merely
within the boundaries of some locality (such as the
city of Windsor in Ontario, in the case of Robert
C. Wian Enterprises, Inc.), it must be known in "a
substantial part" of the country. I am entirely in
agreement with this opinion, but I do not think
that one can go beyond that, without incurring the
risk of giving section 5 an interpretation which
would make almost illusory the protection which
the legislator has attempted to give to foreign
trade marks made known in Canada. Clearly the
eastern Canadian provinces, and even Quebec by
itself, since Quebec is in question here, constitute a
sufficiently "substantial" part of the country to
meet the requirements of section 5.
I am thus of the opinion that plaintiff has
clearly demonstrated that its trade mark was well
known in Canada within the meaning of the Act
when defendants began using it, making it their
name and firm name, in 1972. In fact, it is mani
festly for this reason, I think, that defendants
wanted simply to copy it, as they hoped in doing so
to benefit from the attraction it could have for
Canadians as well as for American tourists likely
to associate their establishment with the American
chain. I am firmly persuaded that they acted in
this way in full knowledge of the facts from the
outset. Only one of the defendants testified, and he
maintained that the name Valle's had been sug
gested to him and his brother, by one Desroches
from whom they had obtained the site, and who
had undertaken to provide physical facilities for
the premises, but that they were not themselves
familiar with the American chain. I place more
reliance on the statement by the agent whom
defendants had authorized to deal with the Regis
trar of Trade Marks, who, obliged to testify, stated
that his clients had been attracted by the "Ameri-
can concept" and simply wanted to use it. Since no
one contends (and in any event, the evidence would
not support such contention) that plaintiff had at
that time or could have since abandoned its mark,
plaintiff presented the evidence which was
required of it in order to claim the protection of
the Act, and the actions of defendants, which
could only have been prejudicial to it,' will be
sanctioned as requested. Such behaviour in these
circumstances cannot be tolerated, either for the
welfare of the public in general or for that of
businessmen in particular. The observations made
by Maclean J. in upholding the action to invalidate
and withdraw a registration in Williamson Candy
Co. v. W J. Crothers Co. [ 1924] Ex.C.R. 183,
observations cited with approval by Thurlow J. (as
he then was) in handing down the judgment of the
5 The confusion is obvious, since the wording was copied
outright, and the damages must then be presumed (La Société
Anonyme Des Ancien Établissements Panhard et Levassor v.
Panhard-Levassor Motor Company, Ld. (1901) 18 R.P.C. 405
(Ch.D.), per Farwell J. at pp. 408-409; Sheraton Corporation
of America v. Sheraton Motels Ltd. [1964] R.P.C. 202 (Ch.D),
per Buckley J. at p. 203; Alain Bernardin et Compagnie v.
Pavilion Properties Limited [1967] R.P.C. 581 (Ch.D.), per
Pennycuick J. at pp. 582, 584-588; Globelegance B.V. v. Sar-
kissian [1974] R.P.C. 603 (Ch.D.), per Templeman J. at pp.
604-7, 609-614).
Federal Court in E. & J. Gallo Winery v. Andres
Wines Ltd. [1976] 2 F.C. 3, [at pages 16-17],
should be repeated here:
The use of trade-marks was adopted to distinguish one person's
goods from those of another, on the market, and to prevent one
person selling his goods as those of another. The system was
designed to encourage honest trading, and the protection of the
buying public. One may safely say that our Trade-Marks Act
was not enacted to encourage in Canada the adoption of foreign
registered marks, even if there were no user by the foreign
registrant here. That would cause confusion and deception, just
the thing that trade-marks were supposed to avoid, and it would
be a fetter upon trade, another thing quite foreign to the
purposes of trade-marks. Trade-mark legislation was designed
as much for the benefit of the public, as for the users of
trade-marks.
If such a practice were knowingly permitted by all countries,
the use of trade-marks would end in hopeless confusion and
bring about a result which trade-marks were originally sup
posed to avoid. Happily the tendency is always towards the
protection of marks registered in another country. In fact a
convention exists today, to which many important countries are
parties, which provides for a system of international registra
tion. In so far as possible each country should I think respect
the trade-marks of the other country, or else international trade
and public interests would suffer. I think knowledge of foreign
registration and user, of a mark applied to the same class of
goods, as in this case, and particularly where the foreign user is
in a contiguous country using the same language, and between
which travel is so easy, and advertising matter so freely circu
lates, should in most cases be a bar to registration knowingly, of
that mark here. This should be particularly true where, as in
this case, the plaintiff's advertising, circulating substantially in
Canada, might very likely mislead the public into thinking that
the defendant's goods were the same as the advertised goods of
the plaintiff. The conspicuous presentation of the word mark on
the label would influence the eye to that conclusion, notwith
standing the less conspicuous but clearly printed matter on the
label, indicating the name of the maker of the goods. That rule
would impose no hardship on any person. Conceivably there
might be instances when this principle might well be ignored.
The case of innocent user and registration is quite a different
thing altogether and need not here be considered. Again if the
plaintiff had neglected to apply for registration here for a long
number of years after his registration in the United States
possibly a different view might be taken of the case. That might
be construed as a deliberate abandonment of this market, or of
the mark in this market. I do not think that contention can yet
fairly be made. The defendant registered the mark, in Canada,
within four months, after the plaintiff registered in the United
States.
In view of the facts before me I am of the opinion that the
registration in question was improperly made. The defendant
was not the proprietor of the mark, and was not entitled to
register the same and it should be expunged. Neither was the
defendant the first to use the mark to his knowledge. The
discretion placed in the Minister by section 11, and now in this
court, may well be exercised against the defendant's registra
tion, and I am of the opinion that the defendant's registration is
calculated to deceive or mislead the public, and for that reason
also, the defendant's registered mark should be expunged.
(Emphasis added.)
An injunction will accordingly be issued concur
rently with an order to defendants to destroy the
labels, menus, place mats or other advertising
material capable of contravening the injunction.
I do not think it would be proper to leave
plaintiff with the option of requiring a statement
of account of the profits which may have been
made by defendants from their unlawful acts, but
it is certainly entitled to be compensated for the
damage which it may have sustained as a result of
the loss of exclusive control of its mark during past
years and the detrimental effect which this loss of
exclusive control may have had on its reputation.
As was agreed before the trial, the question of the
quantum of such damages will be the subject of a
reference under Rule 500 of the General Rules of
the Court.
The counterclaim will naturally be dismissed.
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.