Date: 20001006
Docket: T-1161-00
BETWEEN:
DOLE FOOD COMPANY, INC.
DOLE FOODS OF CANADA LTD.
Plaintiffs
(Defendants by Counterclaim)
- and -
NABISCO LTD.
Defendant
(Plaintiff by Counterclaim)
REASONS FOR ORDER
HENEGHAN J.
[1] Dole Food Company Inc. and Dole Foods of Canada Limited ("Dole") commenced these proceedings against Nabisco Ltd. ("Nabisco") on June 30, 2000. The matters in issue relate to proprietary rights in the trade-mark FRUIT BOWLS.
[2] Among other things, the Plaintiffs seek a declaration that the Plaintiff Dole Food Company Inc. is the owner of the trade-mark FRUIT BOWLS in Canada for use in association with food products and an order that the trade-mark FRUIT BOWLS, registration number TMA525,511 be struck out from the Register of Trade-marks in Canada, pursuant to section 57(1) of the Trade-marks Act, R.S.C. 1985, c. T-13 as amended.
[3] Pursuant to a Notice of Motion dated August 9, 2000, the Defendant sought an interim injunction against Dole in respect of alleged infringement of Nabisco's trade-mark. The timing of that Notice of Motion coincided with the pending national launch by Dole of processed fruit in a clear plastic packaging which was intended to be sold under the trade-marks "FRUIT BOWLS". By an Order made August 18, 2000, the application for the interim injunction was dismissed. The hearing of the Notice of Motion concerning the request for a quia timet interlocutory injunction was subsequently scheduled for September 28, 2000 and heard on that day.
[4] Dole claims to be the owner of the trade-mark FRUIT BOWLS in Canada and further claims that the actions by Nabisco in obtaining registration of the trade-mark FRUIT BOWLS in Canada is unlawful for a number of reasons. The Plaintiff, Dole Foods of Canada Ltd., says that it carries on business as the distributor and vendor of Dole products in Canada, and is licensed by the Plaintiff, Dole Food Company, Inc., to use the trade-mark FRUIT BOWLS in Canada. That trade-mark is registered in the United States of America, registration number 2236329 for goods described as "Processed fruit packed in a plastic container."
[5] The Plaintiffs did not oppose Nabisco's application for registration in Canada of the trade-mark FRUIT BOWLS for proposed use in connection with wares described as "Processed fruit, namely peaches, pears, oranges, grapes, cherries and pineapple."
[6] Nabisco denies and resists the claim of the Plaintiffs and has filed a counter-claim to the action commenced by the Plaintiffs. As part of its prayer for relief in the counter-claim, Nabisco seeks to enjoin use of the trade-mark FRUIT BOWLS in Canada by the Plaintiffs. It seeks other relief including damages or an accounting of profits for alleged infringement of Nabisco's trade-mark FRUIT BOWLS.
[7] The test for granting an interlocutory injunction is set out in RJR-Macdonald Inc. v. Canada (A.G.) [1994] 1 S.C.R. 311, 54 C.P.R. (3d) 114, 111 D.L.R. (4th) 385, 164 N.R. 1. It is a three part test which requires the Applicant to show the following:
| 1. That there is a serious issue to be tried; |
| 2. That irreparable harm will enure to the Applicant if the relief sought is not granted; |
| 3. That the balance of convenience favours granting the injunction. |
[8] Generally, the question of serious issue to be tried will be determined by the motions judge on the basis of common sense and a limited review of the case on the merits. There is an exception to this approach, however, and that arises when the result of an interlocutory motion for an injunction will effectually amount to a final determination of the action. This exception, known as the "Woods" exception, was urged by both parties upon the hearing of this Notice of Motion.
[9] The so-called "Woods" exception was defined by the Supreme Court of Canada as follows in RJR-Macdonald Inc. v. Canada (A.G.), supra, at p. 338:
| Two exceptions apply to the general rule that a judge should not engage in an extensive review of the merits. 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. Indeed Lord Diplock modified the American Cyanamid principle in such a situation in N.W.L. Ltd. v. Woods, [1979] 1 W.L.R. 1294, at p. 1307: |
| Where, however, the grant or refusal of the interlocutory injunction will have the practical effect of putting an end to the action because the harm that will have been already caused to the losing party by its grant or its refusal is complete and of a kind for which money cannot constitute any worthwhile recompense, the degree of likelihood that the plaintiff would have succeeded in establishing his right to an injunction if the action had gone to trial is a factor to be brought into the balance by the judge in weighing the risks that injustice may result from his deciding the application one way rather than the other. |
[10] Nabisco argues that the present case attracts the application of the Woods exception. Nabisco says that its exclusive right to use its registered trade-mark must be recognized now, failing which the concurrent use of Nabisco's trade-mark with the Dole trade-mark for the same wares will yield a situation where neither trade-mark is distinctive of any one source and consequently, neither trade-mark will be valid in Canada. Nabisco submits that unless it now obtains an injunction to restrain Dole's use of the trade-mark FRUIT BOWLS, Nabisco will have lost its exclusive right to use that trade-mark.
[11] Dole also argues that this case should receive a close review on its merits in accordance with the Woods exception. Dole relies on the second part of that exception, that is when the result of the application would impose such hardship on one party as to remove any potential benefit from proceeding to trial.
[12] Dole submits that if Nabisco succeeds in obtaining an interlocutory injunction, Dole will suffer such hardship that it will counteract and eliminate any potential benefit of proceeding to trial. Dole submits that if the injunction is granted, it will be required to change its brand strategy for FRUIT BOWLS, to remove its current packaging and re-package its entire inventory of that product. Dole also argues that an injunction in favour of Nabisco will have a negative effect on its goodwill which has been acquired in connection with the FRUIT BOWLS trade-mark. For these reasons, Dole submits that granting an interlocutory injunction to Nabisco would deprive it of any success if it succeeds at trial.
[13] In my opinion, it is not necessary to go beyond a general assessment of the merits of the case to assess the question of serious issue. In the Statement of Claim, the Plaintiffs put in issue the validity of the Defendant's trade-mark FRUIT BOWLS. The Defendant responds to these allegations in its defence and raises its own allegations of impropriety on the part of the Plaintiffs in the counter-claim.
[14] The challenge to the validity of the Defendant's registered trade-mark is sufficient to satisfy the first branch of the test, that there is a serious issue to be tried. I am satisfied, on a balance of probabilities, that the competing claims to the trade-mark raise a serious issue for trial. It will be for the trial judge to determine the legal entitlement to the trade-mark.
[15] The next issue is more problematic, that is the issue of irreparable harm. Nabisco pleads that it will suffer irreparable harm if it is denied the relief sought. It is seeking a quia timet interlocutory injunction since it is not yet in the market place. The established rule is that an applicant for injunctive relief must present non-speculative evidence that irreparable harm will result in the absence of injunctive relief; see: Centre Ice Limited v. National Hockey League (1994), 53 C.P.R. (3d) 34, 166 N.R.44 (Fed. C.A.); Nature Co. v. Sci-Tech Educational Inc. (1992), 41 C.P.R. (3d) 359, 141 N.R. 363 (Fed. C.A.) and Syntex Inc. v. Novopharm Limited (1991), 36 C.P.R. (3d) 129, 126 N.R. 114 (Fed. C.A.).
[16] When dealing with an application for a quia timet interlocutory injunction, the applicant will not have evidence of irreparable harm since it is not in the market place. In that situation, evidence of irreparable harm can be inferred from the evidence submitted; see: Ciba-Geigy Canada Ltd. v. Novapharm Limited (1994) 56 C.P.R. (3d) 289 (F.C.T.D.).
[17] Nabisco submits that irreparable harm will result to it in a number of different ways. First, it submits that in the absence of an injunction, it will suffer loss of reputation among retailers who purchase products from it. It submits that this damage is irreparable because it cannot be quantified nor can it be compensated.
[18] Furthermore, Nabisco argues that it will suffer a loss of goodwill and appreciation of quality among consumers. Nabisco says that the degree of damage to consumer goodwill is unquantifiable.
[19] Next, Nabisco argues that its FRUIT BOWLS brand and trade-marks will suffer irreparable harm if Dole is not enjoined from the sale of its FRUIT BOWLS product. According to the affidavit of Mr. Craig Hutchison filed in support of Nabisco's motion, that company has spent in excess of one million dollars in developing and testing the FRUIT BOWLS product, including the creation of packaging materials and related sales and marketing materials. Under this heading, Nabisco also speaks of loss of opportunity to develop brand awareness and brand equity. Relying on the affidavit evidence of Dr. Dawar, an expert in the field of marketing, Nabisco argues that it has shown that it will suffer unquantifiable and uncompensable damage to its presence in the market and opportunity to develop its market, if Dole is allowed to continue with its proposed commercial activity in the distribution and sale of its FRUIT BOWLS.
[20] Nabisco relies primarily upon the affidavits of Mr. Hutchison and Dr. Dawar in support of its submissions that it will suffer irreparable harm if injunctive relief is denied. Mr. Hutchison is the Vice-President, Marketing of Nabisco and was presented as a witness to both fact and opinion matters. He was presented as an expert witness in the area of marketing.
[21] Dr. Niraj Dawar is an Associate Professor of Marketing and Walter A. Thompson fellow at the Richard Ivy School of Business, the University of Western Ontario in London, Ontario. He was presented as an expert in marketing management. Since Dr. Dawar is independent of Nabisco, his opinions as to irreparable harm flowing from loss of opportunity to develop a market presence may deserve more weight in assessing the issue of irreparable harm.
[22] According to Dr. Dawar, unless Dole is restrained from the sale of its FRUIT BOWLS, Nabisco will suffer irreparable harm to its reputation in the market, to its goodwill and to its trade-mark FRUIT BOWLS. According to Dr. Dawar, this third item is the most serious cause of potential harm to Nabisco because damage to the trade-mark can affect the ability of Nabisco to develop a brand name into a valuable asset. Nabisco argued that Dole's continued use of the FRUIT BOWLS trade-mark in the Canadian market will irreparably harm the market presence of Nabisco not only in relation to its FRUIT BOWLS product but also in relation to its product marketed under the name FRUIT CUP.
[23] In his affidavit, Dr. Dawar testified that irreparable harm "will occur whether Nabisco's mark is found to be valid or not in the final result".1
[24] The most serious argument submitted by Nabisco on the question of irreparable harm relates to its presence in the market place and its ability to market existing products and wares according to its own market strategy, free from predation by Nabisco. According to the supplementary affidavit of Mr. Hutchison dated August 31, 2000 Nabisco's marketing strategy has already been affected by the current activities of Dole. At paragraph 7 of his supplementary affidavit, Mr. Hutchison describes the situation as follows:
| Nabisco has been irreparably harmed in the market already because Dole is currently taking large quantities of retail shelf space with its FRUIT BOWLS product before we were able to launch. The Dole product has also affected Nabisco's canned single serve product. For example, one major Canadian retailer is removing several DEL MONTE canned fruit cups from its shelves to make room for Dole's product.2 |
[25] The strongest argument presented by Nabisco in relation to the issue of irreparable harm relates to the potential destruction of its marketing strategy for its FRUIT BOWLS wares and its FRUIT CUP product, together with a potential loss of market share. Nabisco says that even if it is successful in the main action, the continued sales of FRUIT BOWLS by Dole in the meantime will have eroded Nabisco's marketing strategy to the extent that the ordinary consumer will not differentiate between the Dole and Nabisco products. Furthermore, Nabisco says that it has deliberately targeted the sale of its FRUIT BOWLS to a specific market, that is 18 to 34 year olds, while continuing to target the "school yard market" as the consumer of its FRUIT CUP products. Dole, on the other hand, is targeting the school age group as well as any other consumers in its efforts to sell its FRUIT BOWLS products.
[26] Nabisco says that if Dole is allowed to continue with its sales program, the distinctiveness of the Nabisco product ultimately will be lost to the consuming public even if Nabisco is successful at trial. It says it will have lost its identify, as a supplier of both the FRUIT BOWLS and FRUIT CUP products, since Dole intends to market its FRUIT BOWLS in a manner designed to take over the market targeted by Nabisco for these two products. In short, Nabisco says that Dole is intent upon a deliberate program to cannibalize Nabisco's share of the market and that Dole intends to do this by illegal and improper use of the Nabisco trade-mark. Nabisco says that as a result, it will suffer irreparable harm and that the nature of this harm is such that it can neither be measured nor compensated.
[27] Although Nabisco mounted a forceful argument, I am not persuaded that the loss to Nabisco, if it occurs, cannot be compensated. The state of the evidence submitted, including the transcripts of cross-examinations on various affidavits, is insufficient for me to conclude that Nabisco will suffer harm which cannot be compensated in damages, if the injunctive relief is denied.
[28] The affidavit of Dr. Dawar uses specific language. He does not speak of damage that "may" occur but rather of damage that "will occur". However, this bald statement, without anything more, is insufficient to meet the evidentiary test which has been established by this Court in a line of cases. In Effem Foods Ltd. v. H.J. Heinz Co. of Canada (1997), 75 C.P.R. (3d) 331, Justice Rothstein addressed the requirements of the evidence needed to prove irreparable harm. He said at p. 332:
| Certainly, inferences must be made when dealing with harm in the future. However, those inferences have to be based upon some clear evidence. The statements made in paragraph 17 essentially constitute assertions as to what the nature of the loss will be and whether the loss is or is not calculable. For example, the affiant maintains that "an incalculable number of retail customers, consumers and potential consumers will be dissuaded from buying PEDIGREE and persuaded to buy KIBBLES `N BITS" and that it would be "virtually impossible to calculate those lost sales". However, such assertions are not evidence of irreparable harm. |
[29] He went on to comment on the type of evidence which can reasonably be expected in this type of case, at p. 333-334:
| 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. The same problem was before Dunnet J. of the Ontario Court (General Division) in UL Canada Inc. v. Procter & Gamble Inc. (1996), 65 C.P.R. (3d) 534. At page 547 she states: |
| Olay Bar has been on the market for several months. There is evidence that it has gained a 2.2% share of the Canadian market. Nevertheless UL has presented no substantive evidence that any market loss which it has suffered or may suffer would be permanent, or that any losses are not calculable. Nor has it presented any substantive evidence that any harm to its goodwill or reputation would be irrevocable. . . |
| With the increased sophistication of accounting and information retrieval techniques, it is probable that any loss could reasonably be established. I am not persuaded that UL has satisfied this portion of the interlocutory injunction test. |
[30] Even in a situation such as this where the parties are speaking about irreparable harm flowing from the destruction of a marketing strategy and loss of market share, it seems to me that it would be possible for Nabisco to lay the foundation in support of its claim of irreparable harm. For example, it could lead evidence as to historical market shares enjoyed both by Nabisco and Dole in relation to the specific consumer markets targeted by each, and then project the effects on that market of the concurrent sales of similar products. Surely it would then be possible for persons skilled in the accounting and actuarial professions to project a figure as to the probable monetary loss which would be suffered by Nabisco.
[31] I am mindful that this is an application for a quia timet interlocutory injunction. In such a case, the court may infer evidence of irreparable harm but in order to do so, a sufficient evidentiary foundation must be established; see: 826129 Ontario Inc. v. Sony Kabushki Kaisha (1995), 65 C.P.R. (3d) 171 (F.C.T.D.).
[32] I am not satisfied that such a firm foundation has been laid in the present case, although it is apparent that there is potential for harm to the marketing strategy and market share of Nabisco if Dole is allowed to continue with its activities. As this Court recognized in Merck and Co. v. Apotex Inc. (1993), 51 C.P.R. (3d) 170, 69 F.T.R. 209 (T.D.), mere difficulty in precise calculation of damages does not constitute irreparable harm as long as there is some reasonably accurate way of measuring them. In the absence of some evidence as to actual sales, projected sales and projections as to the impact on its market share, I am not persuaded that Nabisco has laid the groundwork from which I can infer that irreparable harm will result, in the absence of an injunction against Dole.
[33] Nabisco has failed to meet the second part of the test set out in RJR-Macdonald Inc. v. Canada (A.G.), supra. In these circumstances, it is not necessary for me to address the third issue, that is balance of convenience.
[34] The motion for the interlocutory injunction is dismissed. Costs will be in the cause.
J.F.C.C.
OTTAWA, Ontario
October 6, 2000
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1161-00
STYLE OF CAUSE: DOLE FOOD COMPANY, INC. ET AL.
v. NABISCO LTD.
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: SEPTEMBER 28, 2000
REASONS FOR ORDER OF HENEGHAN, J.
DATED: OCTOBER 6, 2000
APPEARANCES:
| CHRIS PIBUS REPRESENTING THE PLAINTIFFS |
and
JAMES BUCHAN
| ROBERT MACFARLANE REPRESENTING THE DEFENDANT |
and
JONATHAN COLUMBO
SOLICITORS OF RECORD:
| GOWLING LAFLEUR FOR THE PLAINTIFFS |
HENDERSON
TORONTO, ONTARIO
| BERESKIN & PARR FOR THE DEFENDANT |
TORONTO, ONTARIO
__________________1Affidavit of Niraj Dawar, paragraph 23, Motion Record of the Moving Party, p. 257
2Supplementary Affidavit of Mr. Craig Hutchison, paragraph 7, Motion Record of the Moving Party, p. 191