Source: http://worldcopyrightlaw.com/doc/Oxford_Pendaflex_Canada_Ltd_v_Korr_Marketing_Ltd_et_al-SCC1982
Timestamp: 2019-04-25 14:38:27+00:00

Document:
Oxford Pendaflex Canada Ltd. v. Korr Marketing Ltd. et al.
Korr Marketing Limited, Pirie-Mckie Limited, Mitchell Plastics Limited and Pirham Manufacturing Inc.
Laskin C.J. and Ritchie, Dickson, Estey and McIntyre.
REASONS FOR JUDGMENT: Estey J.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Tort–Passing-off–“Get-up” for product to acquire secondary meaning–Burden of plaintiff-appellant in a passing-off action–Facts not establishing secondary meaning.
Appellant manufactured and sold trays under the name Starmark after acquisition of the Starmark company. The trays have been marketed under several changing names by different companies. On agreement respondent Mitchell Plastics manufactured identical trays for the other respondents who sold them to the public. Appellant having unsuccessfully taken action in tort of passing-off against the respondents in the courts below sought an injunction and accounting in this Court on the grounds that (1) the trial court was misled by confusing the names under which the product was sold with the get-up and design of appellant’s product and (2) the courts required it to prove that “the purchaser of the product associated the get-up of this product with the appellant as its source”.
References to name sprang from the complex origin of the trays and changing names under which they were marketed. Although in his reasons for judgment the trial judge referred to “name or get-up”, there did not appear to be a fatal imposition of such an element on the applicable tests to determine whether or not a secondary meaning had been established by the appellant in connection with its trays. The trial judge had correctly expressed himself on the law and had not put upon the appellant a burden not required of a plaintiff in a passing-off action. The appellant failed to establish the fundamental pre-requisite that its trays had acquired a “secondary meaning or secondary reputation”.
Roche Products Ltd. v. Berk Pharmaceuticals Ltd.,  R.P.C. 473; J.B. Williams Company v. H. Bronnley & Co. Ld. (1909), 26 R.P.C. 765; Birmingham Vinegar Brewery Company v. Powell,  A.C. 710; William Edge & Sons, Limited v. William Niccolls & Sons, Limited, A.C. 693, applied; Eldon Industries Inc. et al. v. Reliable Toy Co. Ltd. et al.,  1 O.R. 409, considered; MacDonald et al. v. Vapor Canada Ltd.,  2 S.C.R. 134; Parke, Davis & Company v. Empire Laboratories Limited,  S.C.R. 351; John Haig and Company Limited v. Forth Blending Company Limited and W.R. Paterson Limited (1953), 70 R.P.C. 259, referred to.
APPEAL from a judgment of the Court of Appeal for Ontario (1980), 47 C.P.R. (2d) 119, affirming a judgment of the High Court of Justice (1979), 23 O.R. (2d) 545, 46 C.P.R. (2d) 191, dismissing an action for an injunction and damages for passing-off. Appeal dismissed.
J.L. McDougall, Q.C., and I.V.B. Nordheimer, for the appellant.
W.A.D. Millar, for the respondents.
2. The courts below both required the appellant, in order to establish that its product had acquired a secondary meaning in the market, must prove that “the purchaser of the [appellant’s] product associated the get-up of this product with the appellant as its source”, and not merely that this product with its characteristic get-up came from a single source.
The product in question is a tray commonly used on desks in offices and elsewhere to hold letters and documents. The history of the appellant’s product and its sale in Canada began in the mid-1960’s when an American company, which had been manufacturing and marketing this tray in the United States, exported it to Canada through a manufacturer’s agent. The tray sold under the name “Contempo Tray”. Sometime thereafter the importation into Canada was conducted through a company jointly owned by the American manufacturer and the Canadian manufacturer’s agent. Later, the manufacturer’s agent bought out the United States company’s interest in the Canadian venture which thereupon changed its name to Starmark of Canada Limited and proceeded to manufacture the identical tray and to market it in this country. Thus by 1968 the tray was marketed in western Canada under the Starmark name (which was later registered under the Trade Marks Act) and which name is still used by the appellant in the marketing of this product. The U.S. company continues to manufacture and market its trays in the United States, now under the name Con-Tempo-Tray. The foregoing evidence is imprecise as to dates and sometimes as to names used by the marketing companies.
Subsequently (in 1973), the appellant acquired the shares of Starmark of Canada Limited and from that time forward has manufactured and marketed these trays under the name Starmark. Prior to this acquisition of the Starmark company, the appellant manufactured and marketed a tray under the name “Index Card”. This tray was identical in shape and appearance to the Starmark tray except that it was made of heavier material and the stacking holes along the sides of the tray were located in a slightly different position than in the Starmark tray. The manufacture of this Index Card tray was discontinued in 1974 when the appellant commenced to make and market the Starmark tray. The Index Card tray was, however, still being sold at the retail level in 1978.
In 1973 determining into which product lines we should extend in order to complement our existing line one of the areas that was most attractive was desk accessories and, looking at the market, apart from very large corporations like Borden there was a tray on the market particularly in western Canada being sold by Mr. Michaelson under the name of Starmark. He had been selling that tray for approximately eight years and had established the name Starmark in western Canada and to a very limited degree in Ontario.
The only way to be in that business with that successful tray was to buy the Starmark company and I approached Mr. Michaelson in 1973 and we purchased his company in September of 1973.
Thus the appellant and its predecessors have marketed their present tray under different names since the mid-1960’s, the trays being provided first by importation from the American manufacturer, and since 1968 by manufacture in this country. It is also evident that a very similar tray was marketed in Canada by the appellant itself prior to 1974; and that the U.S. manufacturer who apparently originated this tray continues to make and to market it in the United States but under a different name. None of the trays are the subject of any registration under statute.
The respondents consist of three companies, apparently commonly owned and operated, and Mitchell Plastics Limited who are the makers of the mould and the manufacturers of the tray sold by the respondent group. The Mitchell company has simply submitted its rights to the Court and has not participated in these proceedings. When reference is made to the respondents herein, the reference does not include, unless the context otherwise requires, Mitchell Plastics Limited.
When displayed by a retailer without the plastic envelope, only a discerning eye and curiosity sufficient to examine the stamping on the bottom of the tray turned upside down, or the higher finish of the Starmark tray, could detect any difference.
Q. And it was your intention, I put it to you, to produce a tray that looked the same as the Star-mark tray but could sell at a lower price because it was made of less costly material.
Q. And you chose, I suggest to you, the Starmark shape because you knew from your experience that it was a successful product and that it was known by consumers and office supply dealers throughout Canada?
Q. In fact, Mr. Pirie, isn’t it true that letter trays all perform the same function, that is to hold pieces of paper?
Q. And the two things which distinguish trays one from another are the design, the get-up and the method of stacking?
Q. And in those two particulars your tray is exactly the same as the Starmark tray?
A. Yes. I would have to say so.
The witness, Ronald George Pirie, principal officer apparently of all the defendants [respondents] except Mitchell Plastics Limited and their only witness at trial, made no secret of the fact that he took a Starmark tray to the defendant Mitchell Plastics and requisitioned an exact copy which would be lighter and cheaper. Twenty-eight thousand of these trays were produced of which little less than 24,000 have been sold to wholesalers and large retailers at prices under $3, for sale to the public at somewhat under $5 per tray. Both the plaintiff’s and the defendants’ trays are sold in the same or nearly the same number of colours and are individually wrapped in a clear plastic envelope on which the labelling is, however, markedly different.
It is apparent from the record that the appellant has enjoyed large sales of its trays in Canada, with over a million sold in the past five years. The sales of its trays by the respondents have been very much smaller.
There is evidence, however, that the peculiar shape and stacking features of the Starmark and Korr trays have also been known to the public as features of the “Contempo” tray produced in the United States at the present time by Stemple Manufacturing Co. of Dallas and Los Angeles. An example of this tray, marked with the trademark “Stempco”, the name of the manufacturer and the name “Con-Tempo-Tray” with a raised encircled “R” immediately following the hyphenated word, was entered in evidence for the defendants.
Before 1973 Michaelson’s Starmark Company of Canada Limited had, according to the evidence of George Tuffin, chairman of the board of the plaintiff company, sold his tray under the name of “Starmail” (?“Starmaid”). Heeney’s evidence was to the effect that the name “Contempo” was used by the first company which had imported the tray of this shape and design into Canada and that the name “Starmark” as applied to the tray has only been in use for five years or since the acquisition of Michaelson’s company by the plaintiff.
Reputation associated with a get-up or distinguishing guise which is sufficient to support an action for passing-off has come to be called “secondary meaning”. It is submitted that the specific issue before this Court is whether such a secondary meaning requires it to be shown that the relevant portion of the public recognize the get-up or distinguishing guise as the product of a particular manufacturer or whether it is sufficient that it be demonstrated that the get-up has a reputation or goodwill attaching to it, recognized by the consumer independent of its maker.
Specifically, it is unclear whether the reputation must be such that it identifies the source of the product or whether it is sufficient to show that the product has a reputation because of, and is distinguished by reason of, its get-up or distinguishing guise.
If I were satisfied that the plaintiff’s tray had by name or get-up acquired a secondary meaning in this province, so that that section of the public which is concerned with the matter would be misled as to the origin of the defendants’ tray, attributing it to the plaintiff, I would have no hesitation in finding against them.
We have not been persuaded that the trial judge erred in declining to find that the desk tray of the plaintiff had acquired in Ontario, a secondary meaning or secondary reputation so that purchasers in the market in which it sold associated the design, shape, configuration, or get-up of the plaintiff’s tray as being the plaintiff’s product. Without such a finding the plaintiff could not succeed in this action.
Yet another form of misrepresentation concerning the plaintiff’s business–unfair competition par excellence–is the tort of passing-off, which differs from injurious falsehood in prejudicing the plaintiffs goodwill, not by deprecatory remarks, but quite to the contrary by taking a free ride on it in pretending that one’s own goods or services are the plaintiff’s or associated with or sponsored by him.
Yet another form of misrepresentation concerning the plaintiffs business–unfair competition par excellence–is the tort of passing-off. While it is injurious falsehood for a defendant to claim that your goods are his, it is passing-off for him to claim that his goods are yours.
The scope of the tort has been increasingly expanded to reach practices of “unfair trading” far beyond the simple, old-fashioned passing-off, consisting of an actual sale of goods accompanied by a misrepresentation as to their origin, calculated to mislead the purchaser and divert business from the plaintiff to the defendant. Today, any misrepresentation for any business purpose as to the origin of goods or services which the defendant proposes to or does deal in or employs in the course of business, constitutes an actionable wrong.
Now, in this as in all other passing off cases the basic question is whether, directly or indirectly, the manner in which the goods of the defendant are presented to the relevant consumers is such as to convey to the minds of the latter the impression that they are the goods of the plaintiff. In an “appearance” or get-up case it is not enough simply to say that the former are very like the latter. It must be established that consumers have, by reason of the appearance of the goods of the plaintiff, come to regard them as having some one trade source or provenance, whether manufacturing or marketing, though it matters not that they have no idea at all of the identity of that trade source or provenance.
What is it necessary for a trader who is plaintiff in a passing-off action to establish? It seems to me that in the first place he must, in order to succeed, establish that he has selected a peculiar–a novel–design as a distinguishing feature of his goods, and that his goods are known in the market, and have acquired a reputation in the market, by reason of that distinguishing feature, and the unless he establishes that, the very foundation of his case fails.
I think that the fallacy of the appellants’ argument rests on this: that it is assumed that one trader cannot be passing off his goods as the manufacture of another unless it be shewn that the persons purchasing the goods know of the manufacturer by name, and have in their mind when they purchase the goods that they are made by a particular individual. It seems to me that one man may quite well pass off his goods as the goods of another if he passes them off to people who will accept them as the manufacture of another, though they do not know that other by name at all.
It is not necessary, in my opinion, for the plaintiffs to prove that the ultimate purchasers, who are likely to be misled, know the name of the plaintiffs’ firm. Buyers of the plaintiffs’ goods, without any label at all, might, if they bought the defendants’ goods and noticed the label, still think, having regard to the appearance of the goods, that they were goods which had been long on the market, and that the name of the manufacturer was now disclosed to those who did not previously know it.
No trader, however honest his personal intentions, has a right to adopt and use so much of his rival’s established get-up as will enable any dishonest trader or retailer into whose hands the goods may come to sell them as the goods of his rival.
But I think the evidence is the other way and that the products of both are examples, if anything, of “Contempo” trays in the minds of those witnesses who were called to represent the public in this respect.
It is perhaps, unhappily, a close association between the two ideas, firstly of the misleading implication of the origin of the trays of the defendants-respondents, and the pre-eminent position of the plaintiff-appellant as the supplier of these trays in the market. Nonetheless, in my view, the learned trial judge has correctly expressed himself on the law and has not put upon the appellant a burden not required of a plaintiff in a passing-off action.
In order to succeed in this claim the plaintiffs must establish that the design of the Eldon truck had acquired in Ontario a “secondary meaning” signifying its source and identifying it as the plaintiff’s product.
A claim founded on the alleged marking or appearance of wares contrary to s. 7(b)is doomed to failure unless the claimant establishes that the marking or appearance has become recognized by the public as having a particular origin.
–referring in that connection to the decision of this Court in Parke, Davis & Co., supra. On the facts of that case the failure of the claim was not due to the lack of proof of association of the plaintiff with the product or the lesser standard of proof of a common source. This issue was not addressed by the Court. Rather than being at variance with the law as already examined on the issue now before this Court, the Eldon case simply did not concern itself with that issue but rather with ss. 7 (a) to (e) of the Trade Marks Act, 1952-53 (Can.), c. 49; the Copyright Act,R.S.C. 1952, c. 55; breach of confidence and breach of an implied term in a contract. Indeed, the common law tort of passing-off is not discussed.
This finding of fact of lack of the acquisition of secondary meaning is concurrently found in the Court of Appeal, and this Court would not, save on the existence of some special circumstance or unusual element, disturb such a concurrent finding.
Complaint is raised by the appellant of what might be said to be an inferred or added requirement imposed by the trial judge upon the appellant in order to establish the prerequisite secondary meaning upon which an action for passing-off may be founded, namely that either by name or get-up used in the marketing of its trays by the appellant, such a secondary meaning in the province had been established. These references to name no doubt sprang from the rather complex origin of these trays in the first instance and the changing names under which they have been marketed, first by the American manufacturer and then by the predecessors of the appellant and finally by the appellant itself. It is true that the learned trial judge does make reference to “name or get-up” in the same context or phraseology in the course of his reasons for judgment. However, in what might be termed the operative parts of those reasons there does not appear to be, in my view, anything approaching a fatal imposition of such an element on the applicable tests to determine whether or not a secondary meaning has indeed been established by the appellant in connection with its trays.
The Court of Appeal, in its short judgment already set out, appears to have repeated the phrase used at trial to which objection has been taken by the appellant, and with which I have already dealt. The reference in the Court of Appeal judgment must be read as part of a cryptic summary of the trial judgment, the essential part being a concurring conclusion that the appellant had failed to establish the fundamental prerequisite, that a “secondary meaning or secondary reputation had been acquired by the product of the appellant”.
Since the plaintiff is content to alternate between the common law tort and the provisions of s. 7(b) I must decline the defendants’ invitation to embark on an inquiry as to whether it should likewise be declared unconstitutional.
In this Court no issue as to constitutionality arose and the argument was confined to the action of passing-off as it exists in the common law.
Solicitors for the appellant: Fraser & Beatty, Toronto.
Solicitors for the respondent Mitchell Plastics Limited: McKay, Kirvan, Guy, Kitchener.
Solicitors for the respondents Korr Marketing Limited, Pirie-McKie Limited and Pirham Manufacturing Inc.: Weir & Foulds, Toronto.
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