Missing the Mark – Federal Court of Appeal set aside dismissal in passing off and copyright case
In Sadhu Singh Hamdard Trust v. Navsun Holdings Ltd. (2016 FCA 69), the Court of Appeal set aside the Federal Court’s (2014 FC 1139) decision dismissing Hamdard Trust’s claim of copyright infringement and passing off against Navsun Holdings and remitted the matter to the Federal Court for redetermination, with some guidance.
This case involves a dispute over an unregistered trademark used by a Punjabi subscription daily newspaper, Ajit Daily, published in India, and by a free weekly newspaper, Ajit Weekly, published in Canada. Hamdard Trust, which operates Ajit Daily, sued Navsun Holdings, which operates Ajit Weekly, for use of a similarly stylized “Ajit” logo in its masthead.
Passing Off Claim
A plaintiff asserting a passing off claim must establish that:
- It possesses goodwill in the trademark;
- The defendant deceived the public in the misrepresentation (i.e., the defendant’s mark is likely to be confused with the plaintiff’s distinctive mark), and
- The plaintiff suffered actual or potential damage through the defendant’s actions (Kirkbi, 2005 SCC 65 at para 66).
In this case, the Federal Court dismissed Hamdard Trust’s claim for passing off, finding that it had failed to establish any of the elements for a claim of passing off.
The Federal Court of Appeal set aside this decision, finding that the lower court made several palpable and overriding errors in evaluating the evidence on each element of the test.
On the first element, the Federal Court of Appeal found the lower court erred in assessing Hamdard Trust’s goodwill solely from the perspective of the seven Ajit Daily subscribers in Canada, without considering whether the Ajit Daily had garnered the requisite goodwill in the Canadian market through its website and general reputation. Since the use of a trademark in Canada is not a necessary precondition for the existence of goodwill in the Canadian market under Canadian law, the lower court’s failure to engage in this analysis was an error.
On the second element, the lower court held that Hamdard Trust had failed to establish confusion because it found that the mark lacked distinctiveness. The lower court found that “Ajit” is a common Punjabi word and the mark was simply written in a Punjabi font. However, the Federal Court of Appeal held that the lower court erred in failing to consider additional factors central to the issue of the mark’s distinctiveness, including that the stylized font was developed by a Hamdard Trust employee and subject to copyright, as well as the evidence of the reputation of the Ajit Daily newspaper, which can contribute to the mark’s distinctiveness.
On the third element, the lower court found the Hamdard Trust had not established that it suffered any damages. However, that was in part due to its finding that Hamdard Trust did not possess goodwill in Canada. The Federal Court of Appeal held that if Hamdard Trust did possess the requisite goodwill under the first element of the test, then it could establish damages by showing loss of control over reputation, image, and goodwill. Therefore, due to the previously identified error, the lower court’s findings on damages were likewise set aside.
The lower court dismissed the copyright infringement action because the two parties had entered into a partial settlement agreement in the United States which permitted the use of the masthead after October 1, 2009. The lower court also held, on its own motion, that any dispute under the agreement ought to be decided by a court in the United States.
The Federal Court of Appeal, in setting aside the dismissal of the lower court, held that since the copyright claim extends back to July 2007, the settlement agreement is not relevant to the Ajit Daily’s claim for infringement prior to October 1, 2009. Further, since the parties attorned to the jurisdiction of the Federal Court and the alleged infringement occurred in Canada, the Federal Court was not permitted to decline jurisdiction on its own motion.
This case reaffirms important elements of the law on passing off as well as private international law. In today’s globalized world, where brand recognition and reputation is not necessarily restricted to those places where the brand operates, the protection of IP rights in international markets is a significant concern to foreign companies. The law in Canada is capable of taking into account and protecting reputations earned through participation in global commerce. The factors identified by the Federal Court of Appeal in this case serve as a useful guide to the types of evidence that parties and courts should consider, in this case and beyond, in determining whether a mark merits protection in Canada.
Sadhu Singh Hamdard Trust v Navsun Holdings Ltd., 2016 FCA 69
Court File: A-570-14
Date of Decision: March 2, 2016
copyright infringement Federal Court of Appeal passing off private international law unregistered trademark