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 Source: http://reports.fja.gc.ca/fc/src/shtml/2001/pub/v4/2001fc29001.shtml Reference: [2001] 4 F.C. 113  T-1678-00 2001 FCT 629 Viewpoint International, Inc. (Plaintiff) v. On Par Enterprises Inc. (Defendant) Indexed as: Viewpoint International, Inc.v. On Par Enterprises Inc. (T.D.) Trial Division, Lemieux J.--Toronto, March 22; Ottawa, June 8, 2001. Trade-marks -- Infringement -- Application for interlocutory injunction pending trial of trade-mark infringement, passing-off action to restrain defendant from using "Tommy Bahamas Grill" in association with restaurant in Victoria, B.C., and from infringing plaintiff's trade-mark "Tommy Bahama" -- "Tommy Bahama" registered for use in U.S.A. in association with clothing, restaurants, and in Canada for use in association with clothing -- Trade-mark application for restaurants in Canada filed, not yet advertised -- Tripartite test in RJR--MacDonald Inc. v. Canada (Attorney General) applied -- General rule Judge should not engage in extensive review of merits to determine whether serious issue -- Exception when result of interlocutory motion will result in final determination of action -- Defendant not establishing cost of changing exterior signs, menus would put it out of business -- Thus necessary to establish only arguable (neither frivolous nor vexatious), not prima facie, case -- Plaintiff raised several serious issues to be tried in terms of protection to be accorded proprietary rights in "Tommy Bahama" trade-mark, including likelihood of confusion -- Evidence of irreparable harm must be clear, not speculative -- Although defendant's restaurant operating for several months, no evidence of any lost sale of "Tommy Bahama" clothing, or of restaurant client -- Evidence not establishing weakening of reputation of "Tommy Bahama" mark -- No concrete evidence harm alleged not compensable in damages -- Defendant able to pay if plaintiff awarded damages. Injunctions -- Application for interlocutory injunction pending trial of trade-mark infringement, passing-off action -- Application of tripartite test set out in RJR--MacDonald Inc. v. Canada (Attorney General) -- As to serious issue, plaintiff required to show arguable (meaning neither frivolous nor vexatious), not prima facie, case -- As defendant not establishing cost of changing exterior sign, menus would put him out of business (i.e. interlocutory motion amounting to final determination of action), exception to general rule judge should not engage in extensive review of merits, not arising -- Plaintiff raising several serious issues, including likelihood of confusion -- But not establishing irreparable harm, which must be clear, not speculative -- No evidence of even one lost "Tommy Bahama" restaurant client, sale of "Tommy Bahama" clothing -- No evidence of detrimental impact by loss of control of brand meaning -- Only irreparable harm if damages recoverable at law not adequate remedy -- No concrete evidence harm not compensable in damages because cannot be calculated -- Defendant able to pay damages if awarded to plaintiff. This was an application for an interlocutory injunction pending the trial of a trade-mark infringement and passing-off action, to restrain the defendant from using the trade-mark "Tommy Bahamas Grill" in association with its restaurant in Victoria, British Columbia, and from infringing the plaintiff's registered trade-mark, "Tommy Bahama". The plaintiff is the registered owner of the trade-mark "Tommy Bahama" for use in the United States in association with clothing, restaurants, and specific products such as golf bags, travel trunks, sports bags, and in Canada for use in association with clothing and accessories. A trade-mark application for restaurants in Canada has been filed, but not yet advertised. The plaintiff and its exclusive distributor in Canada plan to open four to eight "Tommy Bahama" stores/restaurants throughout Canada, including British Columbia beginning in 2002. The fictitious "Tommy Bahama" personifies a certain lifestyle depicting an individual with wealth and leisure who can afford to buy luxury goods and spend time relaxing on islands where life is one long weekend. The restaurants in the United States serve five-star cuisine. The defendant began operating a restaurant in Victoria, B.C. under the name "Tommy Bahamas Grill", which features an island theme, and some menu items similar to those offered in the plaintiff's restaurants. The plaintiff alleged that the quality of the decor and cuisine was inferior to that of its restaurants, and commenced this action, claiming infringement of its registered mark and passing off. The issue was whether the tripartite test to obtain an interlocutory injunction, set out in RJR--MacDonald Inc. v. Canada (Attorney General), had been satisfied. Held, the application should be dismissed. The first part of the test is whether there was a serious question to be tried. A preliminary question arose as to whether a strong prima facie case had to be made out or whether the lower threshold of a case which is arguable, i.e. neither frivolous nor vexatious, applied. The general rule is that a judge should not engage in an extensive review of the merits to determine whether a serious issue exists. There are two exceptions to this rule, the first being when the result of the interlocutory motion will amount to a final determination of the action, either when the right which the applicant seeks to protect can only be exercised immediately or not at all, or when the result of the application will impose such hardship on one party as to remove any potential benefit from proceeding to trial. On the evidence, the lower threshold for determination of a serious issue should apply. The defendant did not establish that the cost of changing its exterior sign or menus would put it out of business or materially affect it financially and, indeed, its profit and loss statement shows that it could well afford these costs should an interlocutory injunction be granted. It will recover these costs from the plaintiff should it succeed at trial. In addition many factors which contribute to the success of the restaurant (eg., quality of food and service, ambience, location) would remain should the defendant be compelled to change its name until trial. The plaintiff has raised several serious issues to be tried in terms of protection to be accorded to its proprietary rights in its "Tommy Bahama" trade-mark in Canada, either registered or unregistered. The scope of protection in respect of a restaurant turns on the extent of its reputation in Canada and on evidence of likelihood of confusion. The plaintiff has raised a case of likelihood of confusion, based on affidavits from purchasers of "Tommy Bahama" clothing or patrons of "Tommy Bahama" restaurants in the United States deposing that they had concluded that the "Tommy Bahamas Grill" in Victoria was associated with "Tommy Bahama". Irreparable harm is harm in respect of which damages recoverable at law would not be an adequate remedy. The Federal Court of Appeal in Centre Ice Ltd. v. National Hockey League held that evidence of irreparable harm must be clear and not speculative. The evidence established that "Tommy Bahama" has some brand equity (its ability to act as a distinctive identity to the plaintiff's wares and services and to provide value) or goodwill and some reputation within the target group of upscale buyers which could be irreparably harmed if the evidence supports a finding of harm which cannot be compensated. The plaintiff said that it had demonstrated irreparable harm by establishing that: (1) consumers will be misled into believing "Tommy Bahama" is the source of the defendant's restaurant and will no longer be able to trust that the products and services associated with "Tommy Bahama" originate from the plaintiff (impairment of distinctiveness); (2) damage to the "Tommy Bahama" brand will occur because the defendant's restaurant is inferior; (3) the plaintiff will lose control of the extent, nature and quality of the messages communicated to the public about the "Tommy Bahama" lifestyle brand; (4) such loss of control will have harmful effects on the plaintiff's Canadian business partners. The defendant countered that the evidence of irreparable harm was unsubstantiated and was not founded on any evidence; none of the evidence established that the reputation in the "Tommy Bahama" mark had been impeached or lessened by the activities of the defendant; and there was no evidence of anyone who had or would stop dealing with the plaintiff. The plaintiff's evidence did not meet the evidentiary test established in Centre Ice. When this matter was heard, the defendant's restaurant had been operating for several months, but there was no evidence of even one lost "Tommy Bahama" restaurant client or sale of "Tommy Bahama" clothing. While the plaintiff no longer has exclusivity in the mark, there was no evidence of a detrimental impact by this loss of control of its brand meaning. The plaintiff and its exclusive distributor are continuing to expand "Tommy Bahama" fashion outlets. The evidence did not establish any weakening of the reputation of the "Tommy Bahama" mark. The plaintiff has not proven that it will be harmed by the defendant's activities so as to warrant an interlocutory injunction. Nor was there any concrete evidence that the harm alleged was not compensable in damages because it cannot be calculated. Furthermore, the assets and liabilities of the defendant and its profit and loss statement is indicative of the defendant's ability to pay. In light of the finding concerning irreparable harm, the question of balance of convenience did not have to be dealt with.
APPLICATION for an interlocutory injunction pending the trial of a trade-mark infringement and passing-off action, to restrain the defendant from using the trade-mark "Tommy Bahamas Grill" in association with its restaurant at Victoria, B.C., and from infringing the plaintiff's registered trade-mark, "Tommy Bahama". Application dismissed on the ground that the plaintiff did not establish irreparable harm.
The following are the reasons for order rendered in English by [1]Lemieux J.: The plaintiff, Viewpoint International, Inc. (Viewpoint), seeks an interlocutory injunction, pending the trial of a trade-mark infringement and passing-off action, to restrain the defendant, On Par Enterprises Inc. (On Par), from using the trade-mark or trade-name "Tommy Bahamas Grill" in association with its restaurant in Victoria, British Columbia, and from infringing its registered trade-mark "Tommy Bahama". [2]Viewpoint does not seek to prohibit, on an interim basis, On Par from using the name "Tommy" but rather its combination with "Bahama". Also, Viewpoint does not seek an immediate prohibition; the changeover could take place within 30 days. BACKGROUND [3]Viewpoint is the registered owner, both in Canada and in the United States, of the trade-mark "Tommy Bahama". In the United States, the registration was obtained in 1993 (with a date of first use of March 1993), in association with fashion clothing and, in 1999, in association with restaurants with a date of first use of February 1996. The trade-mark has also been registered in association with specific products such as golf bags, travel trunks, sports bags, etc. [4]In Canada, Viewpoint's registration dates from February 1999 with a filing date of May 1993; at the moment, the wares in association with which the Canadian trade-mark is registered are limited to clothing and accessories; it does not encompass restaurants. I was informed a trade-mark application by Viewpoint for restaurants has been filed but has yet to be advertised. [5]"Tommy Bahama" does not identify a particular living individual; he is a fictional character created as a marketing vehicle aimed at sophisticated consumers who aspire to a certain lifestyle which the name "Tommy Bahama" embodies, i.e. the wealth and leisure of island living. [6]In the United States, Viewpoint operates "Tommy Bahama" retail stores and distributes its clothing line to high end department and retail stores. [7]In the United States, beginning in 1996, Viewpoint expanded into "Tommy Bahama" cafés and emporiums where, at the same location, a customer can eat and shop. There are four such stores/ restaurants in the United States in the resort cities of Palm Desert and Newport Beach in California and two in Florida (Sarasota and Naples). [8]In Canada, there are no "Tommy Bahama" restaurants/emporiums nor are there any self-standing "Tommy Bahama" retail clothing stores. Rather, Viewpoint has an exclusive licensee/distributor, Jaytex Canada Ltd., for men's clothing with an option to distribute women's clothing. [9]"Tommy Bahama" clothing sales in this country are now made through 200 high-end specialty clothing stores and 23 department stores. Some of those stores are in Victoria, B.C. In the fall of 2000, seven "Tommy Bahama" concept shops were opened in Eaton's department stores including the Victoria Eaton Centre. The approximate cost to build and install all seven concept shops in Canada was $230,000. There is a planned expansion of the "Tommy Bahama" shop at the Victoria Eaton Centre scheduled for the summer of 2001 including the addition of a "Tommy Bahama" women's concept shop there. The anticipated cost to Jaytex for the expansion is approximately $175,000. [10]Viewpoint, in the affidavit material filed in support of the injunction, indicates that it and Jaytex have plans to open four to eight authentic "Tommy Bahama" stores/restaurants throughout Canada, including British Columbia beginning in year 2002. [11]Since 1996, in the United States, "Tommy Bahama" restaurants have generated sales of more than US$42,000,000 and retail sales of "Tommy Bahama" clothing and products have exceeded in the US$388,000,000. [12]In that period, in Canada, sales of clothing products have exceeded $6,000,000 and are said now to be $4,200,000 annually with unit sales amounting to 130,000 pieces over a six-year period. Viewpoint says that over the past two years, its sales in Canada have increased dramatically. [13]Since 1994, Viewpoint's direct advertising of its clothing line in Canada has amounted to $270,000; Jaytex's point of sale materials in year 2000 amounted to $94,000 and more than $15,000 for advertising in Harry's magazine. [14]Viewpoint says it has developed its "Tommy Bahama" trade-mark into a valuable brand. The fictitious "Tommy Bahama" personifies a certain lifestyle depicting an individual with wealth and leisure who can afford to buy luxury goods and spend time relaxing on islands where life is one long weekend. "Tommy Bahama" clothing and restaurants display island themes with a palm tree logo. Viewpoint says its restaurants in the United States serve five-star cuisine. [15]The defendant On Par began operating a restaurant in Victoria, B.C., on July 7, 2000, under the name "Tommy Bahamas Grill" and close to that date has known of Viewpoint's trade-mark registration "Tommy Bahama" in Canada. It also features an island theme with what some customers describe as a palm tree logo. Some menu items are said to be the same or similar to those found in the "Tommy Bahama" restaurants. [16]Gray Knight, a principal in On Par, admitted under cross-examination that in late July 2000, he telephoned the President of Viewpoint, Anthony Margolis "to find out a little bit more. Maybe we could do merchandise, I don't know". Mr. Margolis, in his affidavit, said during that telephone call, Mr. Knight inquired about a licence for golf equipment. [17]On September 12, 2000, Viewpoint commenced an action in this Court claiming trade-mark infringement of its registered mark (sections 19 [as am. by S.C. 1993, c. 15, s. 60], 20 [as am. by S.C. 1994, c. 47, s. 196] and 22 of the Trade-marks Act [R.S.C., 1985, c. T-13]) as well as passing off (paragraphs 7(b) and (c) of the Trade-marks Act). On Par has defended but has not counterclaimed to attack the validity of the "Tommy Bahama" registered mark. [18]On Par, in its statement of defence said: (1) The "Tommy Bahama" trade-mark registered in Canada is confined to the use of the words "Tommy Bahama" relating to clothing and accessories and Viewpoint has no retail stores in Canada combined with a restaurant concept; (2) Viewpoint has no proprietary or intellectual property protection in Canada for "Tommy Bahama" name in association with the operation of a restaurant; (3) The "Tommy Bahama" trade-mark is not well known in Canada, and more particularly, in Western Canada; (4) On Par operates a restaurant under the distinct name "Tommy Bahamas Grill" and its services are distinct from those offered by Viewpoint; (5) On Par's restaurant name is not confusing with Viewpoint's previous use of the "Tommy Bahama" trade-mark in Canada in that the name "Tommy Bahama" has no association in Canada whatsoever with the operation of restaurant services, the name "Tommy Bahama" is not in any way distinctive or well-known in Canada and On Par does not use that name in association with identical or similar wares as it has no presence or participation in the retail clothing industry whatsoever. [19]None of the voluminous affidavit evidence including expert evidence was cross-examined upon except that of Gray Knight, a principal of the defendant, On Par. ANALYSIS [20]The tripartite test which must be met to obtain an interlocutory injunction is well known and is set out in RJR--MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311. I deal with each element of the test separately.
[21]A preliminary question arose as to which test should apply to determine whether Viewpoint had made out there was a serious question to be tried: (1) whether a strong prima facie case had to be made out or; (2) whether a lower threshold applied and that is whether the applicant had to demonstrate a case which is arguable, i.e. was neither frivolous nor vexatious. [22]This question arose because there are two exceptions to the general rule a judge should not engage in an extensive review of the merits to determine whether a serious issue exists. Justices Sopinka and Cory, at page 338 in RJR--MacDonald Inc., supra, said this: The first arises when the result of the interlocutory motion will in effect, amount to a final determination of the action. This will be the case either when the right which the applicant seeks to protect can only be exercised immediately or not at all, or when the result of the application will impose such hardship on one party as to remove any potential benefit from proceeding to trial. [23]Counsel for Viewpoint referred me to Justice Reed's decision in Movel Restaurants Ltd. v. E.A.T. At Le Marché Inc. (1994), 59 C.P.R. (3d) 73 (F.C.T.D.), in support of his argument that the lower threshold should apply. [24]In issuing an interlocutory injunction, Justice Reed, on that point, said this at page 76: Although counsel for the defendant argued otherwise, this is not a case where the granting of an interlocutory injunction would be dispositive of the issue between the parties. In Duomo Inc. v. Giftcraft Ltd. (1984), 1 C.P.R. (3d) 165, . . . it was held that where such is the case a plaintiff must prove a strong prima facie case in order to obtain an injunction. In the present case, if an injunction is granted and the defendant is successful at trial, the defendant could readopt the use of Le Marché, at the plaintiff's expense. This is not a situation in which a strong prima facie case need be proved to justify the granting of the injunction. [25]Counsel for Viewpoint also referred me to Justice Walsh's decision in the Lone Star Café case, indexed as 688863 Ontario Ltd. v. Landover Enterprises Inc. (1991), 35 C.P.R. (3d) 399 (F.C.T.D.), where he granted an interlocutory injunction and on the point of serious issue adopted the lower threshold. [26]I am satisfied, on the evidence before me, the lower threshold for determination of a serious issue should apply. [27]The defendant has not established the cost of changing its exterior sign or menus would put him out of business or materially affect him financially and, indeed, his profit and loss statement shows he could well afford these costs should an interlocutory injunction be granted. He will recover these costs from the plaintiff should he succeed at trial. In addition, Mr. Knight, on cross-examination, admitted many factors to the success of his restaurant would remain should he be compelled to a name change until trial. What would remain is the quality of food and service; the restaurant's appearance and ambience; its location and the entertainment and promotional events that attract its clientele such as "Comedy Night", "Mystery Night" and "Thirsty Thursday". [28]I am satisfied Viewpoint has raised several serious issues to be tried in terms of the protection to be accorded to its proprietary rights in its "Tommy Bahama" trade-mark in Canada either registered (in the case of clothing) or unregistered, (in the case of restaurants). [29]The scope of protection in respect of a restaurant turns on the extent of its reputation in Canada (see for example Enterprise Rent-A-Car Co. v. Singer, [1996] 2 F.C. 694 (T.D), sustained on appeal (1998), 79 C.P.R. (3d) 45 (F.C.A.)) and on evidence of likelihood of confusion. [30]I need not delve to any great extent on the affidavit material produced to demonstrate actual confusion, i.e. association by individuals of the defendant's services with the plaintiff's wares or services when seeing the name "Tommy Bahamas Grill". I am satisfied Viewpoint has raised a case of likelihood of confusion. Viewpoint's deponents either had bought "Tommy Bahama" clothing or had visited the "Tommy Bahama" restaurant stores in the United States. They deposed either seeing the "Tommy Bahamas Grill" restaurant in Victoria or examining photographs. They concluded the On Par restaurant was associated with "Tommy Bahama". [31]Counsel for the defendant acknowledged there was some evidence of actual confusion but argued that evidence was very weak and would not support a finding of irreparable harm.
[32]The Federal Court of Appeal in Centre Ice Ltd. v. National Hockey League (1994), 53 C.P.R. (3d) 50 (F.C.A.) had much to say about the required elements in determining the question of irreparable harm, that is, harm in respect of which damages recoverable at law would not be an adequate remedy. Such evidence must be clear and not speculative. This criteria was recently reiterated by that same Court in A. Lassonde Inc. v. Island Oasis Canada Inc., [2001] 2 F.C. 568 (C.A.). [33]Justice Heald in Centre Ice, supra, referred to Syntex Inc. v. Novopharm Ltd. (1991), 36 C.P.R. (3d) 129 (F.C.A.), at page 135 as an example where the Federal Court of Appeal held that the finding by the Trial Judge that the applicant is likely to suffer irreparable harm was insufficient to warrant the granting of an interlocutory injunction because the use of the tentative expression "is likely" in the evidence to prove irreparable harm was insufficient in view of the Court's earlier jurisprudence. It was necessary, Justice Heald found, "for the evidence to support a finding that the applicant would suffer irreparable harm". [34]Justice Heald, in Centre Ice, supra, also referred to the Federal Court of Appeal's decision in Nature Co. v. Sci-Tech Educational Inc. (1992), 41 C.P.R. (3d) 359 (F.C.A.), at page 367, as the kind of case where the Court refused a request for an interlocutory injunction because "the evidence did not really show that [irreparable harm] would result". [35]In Centre Ice, supra, Justice Heald ruled that on the evidence, it was reasonably open for the Trial Judge to conclude the appellant's use of the trade-mark "Centre Ice" was confusing to the public. [36]However, Justice Heald, at page 53, disagreed with the following finding made by the Trial Judge:
[37]In overturning the Trial Judge on this point, Justice Heald wrote at page 53: I am unable to agree that a finding of confusion between competing products necessarily leads to a loss of goodwill for which the plaintiff cannot be compensated in damages. A similar issue was considered by the Alberta Court of Appeal in Petro-Canada Inc. v. Good Neighbour Fast Food Stores Ltd. (1987), 18 C.P.R. (3d) 63 . . . Kerans J.A. speaking for the court said:
[38]He drew the following conclusion at page 53: On the basis of that decision, which I find persuasive, even if loss of goodwill through the use of a confusing mark was shown, a case for irreparable harm would not have been made out because such loss could be fairly compensated for in damages. However, on this record, I cannot conclude that a loss of goodwill has been established. The respondent did not adduce any evidence to show that it had lost even one single sale as a result of the activities of the appellants. The respondent filed many affidavits to the effect that it had acquired a reputation for honesty, integrity and fairness. However, none of the evidence established that this reputation had been impeached or lessened in any way by the actions of the appellants. While the record contains some evidence of confusion, there is no specific evidence that such confusion had led any customer to stop dealing or to even consider not dealing with the respondent on future occasions. [Emphasis mine.] [39]He then referred to an affidavit put forward by an officer of the respondent who said: "I believe that unless the N.H.L. is stopped from using the name `Centre Ice' within the trading area of Centre Ice here in Alberta irreparable harm to Centre Ice will result". [40]Justice Heald said this about that statement at pages 53-54: The problem with this statement is that it appears to be unsupported by any evidence leading to a conclusion that, as a consequence of this confusion, there was a loss of goodwill and a loss of distinctiveness. The Jones' affidavit makes reference to confusion in the market-place. However, nowhere does it refer to, let alone establish, a loss of goodwill as a result of the activities of the appellants. It appears that the allegation of irreparable harm in para. 49 is nourished only by the confusion which was established by the evidence. It cannot be inferred or implied that irreparable harm will flow wherever confusion has been shown. Accordingly, the learned Motions Judge erred in basing his finding of irreparable harm on this passage from the Jones' affidavit. Likewise, I believe that the learned Motions Judge erred in the passage quoted, supra, when, in effect, he inferred a loss of goodwill not compensable in damages from the fact that confusion had been proven. This view of the matter runs contrary to this Court's jurisprudence to the effect that confusion does not, per se, result in a loss of goodwill and a loss of goodwill does not, per se, establish irreparable harm not compensable in damages. The loss of goodwill and the resulting irreparable harm cannot be inferred, it must be established by "clear evidence". On this record, there is a notable absence of such evidence". As in the case at bar, in the Nature case, supra, there was some evidence of actual confusion. However, that evidence did not go so far as to show that the confusion would cause irreparable harm to the respondent. . . . In the Court's view, the frailty of that evidence was fatal to the submission of irreparable harm. In my view, the situation here is identical. [Emphasis mine.]
[41]As evidence of irreparable harm, counsel for Viewpoint principally relied upon the affidavits of S. Anthony Margolis, the President of Viewpoint and the affidavits of Dr. Kenneth R. Deal, Chairman of Marketing, Business Policy and International Business in the Michael G. DeGrootte School of Business at McMaster University and President of Marketing Decision Research Inc., a market research company. Neither deponent was cross-examined. Each deponent filed two affidavits: one in support of the applicant and one in reply to the defendant's affidavits. [42]In his affidavit, Mr. Margolis said Viewpoint was particularly vulnerable at the present time to On Par's use of the name "Tommy Bahamas Grill" in connection with a restaurant and will suffer irreparable harm if On Par is permitted to continue such use of the "Tommy Bahama" trade-mark. [43]Mr. Margolis said Viewpoint was particularly concerned that the defendant's restaurant will be the first to operate under the "Tommy Bahama" brand in Canada and said that "our reputation is entirely in the hands of the defendant, over whose quality we have no control and no ability to control". He pointed out On Par had chosen to open up its restaurant in a destination or location for travellers and said that Victoria is tremendously popular for tourists which means On Par's operation will be exposed to a large number of people magnifying greatly the threat of harm to Viewpoint's reputation. [44]Mr. Margolis went on to say the "Tommy Bahamas Grill" "offers a quality of cuisine and decor that is inferior to that of an authentic `Tommy Bahama' restaurant" which he says Viewpoint has taken great pains to insure the quality meets its exacting standards. He said the compromising of most of these standards by the defendant causes damage to the "Tommy Bahama" brand which cannot be compensated through money. He said "because of the differences in cuisine and decor between an authentic `Tommy Bahama' restaurant and the `Tommy Bahamas Grill', potential customers of an authentic `Tommy Bahama' restaurant who first dine at the `Tommy Bahamas Grill' will be disappointed, and will likely never return to our original restaurants". He added "an incalculable number of authentic `Tommy Bahama' restaurant customers may elect to dine at the `Tommy Bahamas Grill' instead of travelling to an authentic `Tommy Bahama' restaurant as a result of the confusing similarity of the trade names". Mr. Margolis deposed the restaurant business is characterized by a high degree of risk, and the frequent failure of businesses. He believed On Par's new restaurant venture is subject to a "high likelihood of failure" and the defendant will not be able to pay damages awarded at trial. He said the "threat of a failed business, with declining standards of service and cuisine, offers a nightmare scenario for our brand". [45]In his reply affidavit, Mr. Margolis points to On Par's promotions and says he is "even more convinced that the continued use by On Par of the `Tommy Bahama' brand is causing irreparable harm". He says these promotions send to consumers a message which is entirely "inconsistent with our brand strategy but which we are powerless to prevent unless an injunction is granted". [46]He says On Par's promotions are the sort one might find at a casual neighbourhood bar but "definitely not at a Tommy Bahama restaurant in one of our four locations". [47]I now turn to Dr. Deal's evidence. In order to formulate his opinion, Dr. Deal assumed certain facts were true and they were: (1) Viewpoint operates a chain of restaurants in the United States under the "Tommy Bahama" name and owns a corresponding U.S. trade-mark registration; (2) Viewpoint sells clothing under the "Tommy Bahama" name in Canada and in the United States; (3) Viewpoint owns a trade-mark registration for "Tommy Bahama" in Canada for clothing; (4) Viewpoint has filed a trade-mark application for "Tommy Bahama" mark in Canada for restaurant services; (5) "Tommy Bahama" is distinctive of Viewpoint in Canada for clothing; and (6) a number of witnesses have been confused by the "Tommy Bahamas Grill" and restaurant and believe it must have some association with the makers of "Tommy Bahama" clothing. [48]I reproduce below the summary of Dr. Deal's conclusions which reflect the essence of his opinion: 16. Regarding the nature of the harm allegedly suffered by Viewpoint, it is my opinion that the use of the TOMMY BAHAMAS GRILL mark causes clear damage to the brand meaning or equity of Viewpoint's TOMMY BAHAMA mark (that is, the ability of the TOMMY BAHAMA mark to act as a distinctive and unique identity of Viewpoint's wares and restaurant services and to provide value to Viewpoint). Because of the Defendant's competing use, the TOMMY BAHAMA mark can no longer exclusively identify or distinguish wares and services sourced from Viewpoint as strongly and clearly as it did before use began of the confusing TOMMY BAHAMAS GRILL mark. Viewpoint has lost control over its brand in three important ways: (1) it has lost control over who communicates to the public in the TOMMY BAHAMA name; (2) it has lost control and quality of the messages conveyed in the TOMMY BAHAMA name; (3) it has lost control over the nature and quality of products and services offered under the TOMMY BAHAMA name. In my opinion, this loss of control over the brand will cause irreparable damage to the goodwill associated with it, and to the value of, the TOMMY BAHAMA mark. This type of damage will be impossible to calculate accurately in monetary terms. 17. The nature of the harm also manifests itself through what would be an interruption, block or partial block of what would otherwise be the natural, and demonstrated extension of the brand meaning of TOMMY BAHAMA. Viewpoint's marketing strategy is to create a "lifestyle brand", which goes beyond clothing, into restaurants and furniture. Viewpoint has extended its range of wares and services it offers under the TOMMY BAHAMA brand in the U.S. from clothing into restaurant services and furniture, and has plans to open restaurants in Canada. It is impossible to calculate in monetary terms the harm caused by the interruption to the extensions of the brand. [49]As I understand the thrust of Dr. Deal's affidavits, the irreparable harm he sees is to the brand equity or brand meaning of the "Tommy Bahama" mark; a brand which supports an island lifestyle for the purpose of selling upscale clothing, furniture and other products. He says Viewpoint initiated the "Tommy Bahama" brand with the intention of establishing a lifestyle brand and high quality clothing as the natural base product on which to establish the equity of its island lifestyle branding strategy. [50]In his view, lifestyle brands literally depend on the targeted market segment (sophisticated upscale consumers) believing that the brand meaning behind the "Tommy Bahama" mark is synonymous with the promoted lifestyle. He adds that customers must feel comfortable with the congruence between the lifestyle and those products, high quality leisure clothing and relaxed high quality restaurant, sold by the marketer. [51]These targeted members of the upscale market segment, Dr. Deal says, buy and use "Tommy Bahama" products and services to say to themselves and to others that they belong to this exclusive "island lifestyle club; the `Tommy Bahama' trade-mark becomes their membership badge". [52]According to Dr. Deal, when there is a clash between the brand image or meaning, the upscale leisure island lifestyle and the nature and quality of the products and services, associated with the trade-mark, irreparable damage arises because customers or club members will feel betrayed by the drop in quality or the lack of protection of exclusive brand image. [53]Dr. Deal then looks at the activities of On Par, an activity which has caused confusion which in his opinion will cause loss of goodwill and equity established by Viewpoint which will affect Viewpoint's business position in a material manner. He then speaks of the impact on supply chain partners; on Jaytex's expansion plans into restaurants and their impact on sales and profits. [54]Dr. Deal then identifies another form of irreparable harm in the form of a breach of trust caused by the opening of Tommy Bahamas Grill in Victoria--the trust the public can place on communication bearing the words "Tommy Bahama" actually being from Viewpoint and signifying the authentic "Tommy Bahama" product line of high quality products and services that support island lifestyle. Dr. Deal says this breaching of the trust by On Par causes irreparable harm to Viewpoint's "Tommy Bahama" trade-mark that is impossible to calculate accurately. [55]Lastly, another form of harm to the brand arises because of Viewpoint's lack of control over the quality and services covered by the "Tommy Bahama" mark. The reputation of the "Tommy Bahama" mark is now in the hands of On Par. This lower quality equals brand betrayal. [56]In his second affidavit, Dr. Deal concludes that the management of On Par "seems to be following a retailing strategy that is very commonly followed by roadhouses and pubs", a kind of activity which would not be presented by the authentic "Tommy Bahama" brand to its intended target. He says the lack of congruence and the questioning of the identity and purpose of the authentic "Tommy Bahama" brand will cause irreparable harm to Viewpoint and its business partners.
[57]I find that the "Tommy Bahama" mark has some brand equity (its ability to act as a distinctive identity to Viewpoint's wares and services and to provide value) or goodwill and some reputation within the target group of upscale buyers which could be irreparably harmed if the evidence in the record supports a finding of harm which cannot be compensated. [58]The concept of goodwill is, in law, a broad one as recognized by Justice Thurlow in Clairol International Corp. et al. v. Thomas Supply & Equipment Co. Ltd. et al., [1968] 2 Ex. C.R. 552, adopting what Lord MacNaghton said in Trego et al. v. Hunt, [1896] A.C. 7. Justice Thurlow wrote at page 573: . . . the goodwill attaching to a trade mark is I think that portion of the goodwill of the business of its owner which consists of the whole advantage, whatever it may be, of the reputation and connection, which may have been built up by years of honest work or gained by lavish expenditure of money and which is identified with the goods distributed by the owner in association with the trade mark. [59]Conversely, a depreciation of the value of goodwill [at page 573] "means simply to reduce in some way the advantage of the reputation and connection". [60]I was invited by counsel for Viewpoint to lower the evidentiary barrier established in Centre Ice, supra, which Justice Rothstein in Effem Foods Ltd. v. H.J. Heinz Co. of Canada (1997), 75 C.P.R. (3d) 331 (F.C.T.D.), at paragraph 2, described as the "high standard necessary to prove irreparable harm". He said the validity of the "Tommy Bahama" mark had not been attacked by On Par and that fact lowers the barrier. [61]The Federal Court of Appeal in A. Lassonde, supra, was extended the same invitation but declined it. Justice Létourneau said the relief sought in an interlocutory injunction--the stopping of commercial activity pending trial--was such as to require proof of irreparable harm. Justice Létourneau reaffirmed the requirements of Centre Ice, supra, in terms of irreparable harm in upholding Justice McGillis' refusal to issue the injunction. [62]Viewpoint said it had demonstrated irreparable harm by establishing that (1) consumers will be misled into believing "Tommy Bahama" is the source of On Par's restaurant and will no longer be able to trust that the products and services associated with "Tommy Bahama" originate from Viewpoint (impairment of distinctiveness); (2) damage to the "Tommy Bahama" brand will occur because On Par's restaurant is inferior; (3) Viewpoint will lose control of the extent, nature and quality of the messages communicated to the public about the "Tommy Bahama" lifestyle brand; (4) such loss of control will have harmful effects on Viewpoint's Canadian business partners. [63]Counsel for On Par countered by saying the evidence of irreparable harm put forward by Mr. Margolis and Dr. Deal is unsubstantiated and is not founded on any evidence in the record. He said none of the evidence established that the reputation in the "Tommy Bahama" mark had been impeached or lessened by the activities of On Par and there was no evidence of anyone who had or would stop dealing with Viewpoint. [64]He says Mr. Margolis has no evidentiary support to substantiate his statement that customers of an authentic "Tommy Bahama" restaurant who first dine at On Par restaurant will be disappointed and will likely not return; he says the evidence is to the contrary and points to the affidavits of Mr. and Mrs. Layton. He says there is no evidentiary support for the proposition "an incalculable number of authentic `Tommy Bahama' restaurant customers may elect to dine in Victoria instead of travelling to an authentic `Tommy Bahama' restaurant". [65]I agree with counsel for On Par's assessment of Viewpoint's evidence. It does not meet the evidentiary test established in Centre Ice, supra. [66]When this matter was heard On Par's restaurant had been operating for several months, since July 2000, albeit some of those months were winter months. Yet there was no evidence of one lost sale of "Tommy Bahama" clothing or of a restaurant client. [67]While it is true Viewpoint no longer has exclusivity in the mark, there is no evidence of a detrimental impact by this loss of control of its brand meaning. [68]Viewpoint and Jaytex continue their expansion of "Tommy Bahama" fashion outlets; the Eaton's concept shop is being enlarged in Victoria this summer despite On Par's operations. Philip Nyren, an owner of British Importers Men's Wear located in Victoria a few blocks away from the On Par Restaurant sells "Tommy Bahama" clothing. In his affidavit, he did not express any concern about On Par's operations. [69]Jaytex expressed concern about Viewpoint's loss of control of the "Tommy Bahama" mark. However, as noted, it pursued its expansion in Victoria after On Par began its operations. [70]Jaytex said On Par's operations puts in jeopardy the entire plan for opening "Tommy Bahama" restaurants in Canada. Mr. Margolis had deposed plans to open "Tommy Bahama" restaurants in Canada in 2002 including one in British Columbia although he did not say Victoria was the location. Counsel for On Par did not cross-examine on these statements but challenged them as mere allegations not substantiated by specific evidence of project development business plans, license negotiations, etc. I agree. Viewpoint's evidence does not satisfy me. [71]As noted, Viewpoint filed several affidavits from individuals who deposed to knowing the "Tommy Bahama" mark and drew linkages between the mark and On Par's operation. I found it interesting as to what these deponents did not say. They did not say they would stop shopping for "Tommy Bahama" clothing or go to its restaurants. They did not say they were betrayed by On Par's operations and their trust in Viewpoint had been breached. They did not say the "Tommy Bahama" mark had been diminished by seeing the "Tommy Bahamas Grill" signage in Victoria. It is true some deponents said On Par's restaurant did not measure up to the "Tommy Bahama" restaurants but this fact had no impact on their appreciation of the quality of the products and services associated with the "Tommy Bahama" mark. [72]It was on this basis that counsel for On Par submitted Dr. Deal's expert opinion was not grounded in the evidence. I think he is correct on that point. I do not see in the evidence any weakening of the reputation of the "Tommy Bahama" mark. [73]Counsel for Viewpoint urged upon me Justice Teitelbaum's decision in Imax Corp. v. Showmax, Inc. (2000), 5 C.P.R. (4th) 81 (F.C.T.D.), where an interim injunction was issued. Counsel pointed out the expert evidence was accepted in that case particularly the evidence of damage to Imax's brand equity. The evidence in that case is the same as here. [74]A review of Justice Teitelbaum's decision shows that the evidence before him was quite different than what I was presented with in terms of sharing an identical marketplace with an identical service and the use by Showmax of the Imax mark to promote its services. I would have been prepared to accept Dr. Deal's evidence if it had been substantiated. It was not. [75]Moreover, in A. Lassonde, supra, Justice Létourneau placed the Imax case in a special category of a quia timet injunction. This is not the case here. [76]In my view, Viewpoint has not proven that it will be harmed by the activities of On Par so as to warrant an interlocutory injunction. In addition, there is no concrete evidence the harm alleged is not compensable in damages because it cannot be calculated. I return to what Justice Rothstein said in Effem Foods, supra, where he wrote [at paragraph 7]: Sophisticated participants in the market place such as these litigants should be able to provide the Court with an indication of loss based upon historical experience and a mathematical or statistical analysis of the circumstances demonstrating that the loss is not reasonably calculable which would give the Court some degree of confidence that the kind of loss being alleged would indeed occur and cannot be calculated. [77]The ability of On Par to pay an award of damages if Viewpoint succeeds at trial was put in issue. Examining the record, the assets and liabilities of On Par and its profit and loss statement, is indicative of On Par's ability to pay. [78]To sum up, I am of the opinion Viewpoint's evidence suffers from the same defect Justice McGillis observed in A. Lassonde Inc. v. Island Oasis Canada Inc. (2000), 5 C.P.R. (4th) 165 (F.C.T.D.), on the application before her, a view sustained by the Federal Court of Appeal. [79]In the circumstances, there is no need to deal with the issue of balance of convenience. DISPOSITION [80]For all of these reasons, this application for an interlocutory injunction is dismissed with costs to the defendant in any event of the cause. |
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