The Curious Case of the Woodpecker and the Injunction

The Curious Case of the Woodpecker and the Injunction

In Woodpecker Hardwood Floors (2000) Inc v Wiston International Trade Co, Ltd (2013 BCCA 553), the BC Court of Appeal denied an appeal to overturn an interlocutory injunction which enjoined the use of a registered trade-mark in an action for passing off.  This case is surprising, both due to its strange relationship with judicial precedent and the important issue it raises involving the potential jurisdictional overlap by the provincial and federal courts in the administration and enforcement of trade-marks in Canada.

Trade-mark registration grants the owner of a mark the exclusive right to its use throughout Canada in respect of specific wares or services (pursuant to s. 19 of the Trade-Marks Act). Previously, the Ontario Court of Appeal (ONCA) referred to this provision as a “trump card” for a defendant, holding a valid registration, accused of passing off by the owner of an unregistered mark. However, the British Columbia Court of Appeal’s (BCCA) refusal to overturn an injunction ordered against a registered trade-mark owner shows that provincial courts may be at odds with respect to the effects of registration under the Trade-Marks Act.

A Tale of Two Woodpeckers

Two businesses operating in BC allegedly marketed wood flooring products using a trade-mark that contains either an image of a woodpecker or the word "woodpecker" itself. The plaintiff, Woodpecker Hardwood Floors (2000) Inc, has been in the hardwood flooring business since as early as 2000. The defendants, Wiston International Trade Co, Ltd and Wiston Building Materials Co, obtained trade-mark registrations in early 2013 for various logos and word marks including some which use the word “Woodpecker” in association with wares and services involving hardwood floors. The plaintiff, in response to what it viewed as an infringement of its common law trade-mark rights, alleged passing off and sought a declaration of invalidity, as well as an interim injunction.

This situation closely tracks elements in most trade-mark litigation – save for the fact that Woodpecker sought relief in the BC Supreme Court, the provincial court of general jurisdiction. Since the claim involves allegations of invalidity concerning a registered trade-mark, such a claim would at first seem clearly within the Federal Court’s jurisdiction. The fact that an injunction was granted – and upheld on appeal – by BC provincial courts suggests that, in at least one province, whether or not provincial courts can declare trade-mark registrations to be invalid is a serious question to be tried. Related to this issue is whether or not owners of registered trade-marks can be restrained from using their marks by unregistered owners in various provinces.

The “Trump Card” and the Federal View

In Ontario, the Court of Appeal has referred to a trade-mark registration as a “trump card” which gives the owner a full answer to an allegation for passing off. In Molson Canada v Oland Breweries ([2002] OJ No 2029), the ONCA found that the defendant was entitled to use its registered mark in association with beer, and if a competitor takes exception to that use, “its sole recourse is to attack the validity of the registration” [at para 16].

While the plaintiff in Woodpecker did attack the validity of the defendant’s registration, it did so by seeking a declaration of invalidity in provincial court. This type of attack differs from the interpretation of Molson v Oland offered by the Federal Court in Philip Morris Products SA v Marlboro Canada Ltd (2010 FC 1099, 2012 FCA 201 reversed in part on different grounds) in which Justice de Montigny found that the appropriate remedy for an unregistered owner alleging passing off against the holder of a registration was to “seek the expungement of the infringing trade-mark” [at para 209]. While the Federal Court of Appeal clarified that Molson v Oland only applied to the use of the mark as registered, the decision still seems dispositive in the current case.

Yet the BCCA still confirmed that there is a serious question to be tried. To understand why, one has to look to the language of the Trade-marks Act, the jurisdiction of the Federal Court, and even the division of powers established in ss. 91 and 92 the Constitution Act, 1867.

Jurisdictions, Conflict and the Availability of Relief in Provincial Court

Trade-marks are not explicitly subject to the exclusive legislative authority of the Parliament of Canada under the Constitution Act, 1867, unlike “Patents of Invention and Discovery” and “Copyrights” (ss. 91(22) and 91(23), respectively). Instead, federal legislative competence has historically been grounded in the broad section permitting legislation regarding the “Regulation of Trade and Commerce” (s. 91(2)).

Parliament’s legislative competence to pass legislation which affects the common law tort of “passing off” was the subject of a direct challenge in Kirkbi AG v Ritvik Holdings Inc, 2005 SCC 65. In Kirkbi, the Supreme Court found that s. 7(b) of the Trade-marks Act, which codifies the common law civil action of passing off, is sufficiently integrated into the federal trade-mark scheme and therefore constitutional.

However, passing off remains a valid cause of action in provincial courts, who have original jurisdiction with respect to “Property and Civil Rights in the Province” (Constitution Act, 1867, s. 92(13)). Therefore, Parliamentary and provincial authority over trade-marks overlaps between the two jurisdictions.

As a result, potential overlapping jurisdictions can exist between federal and provincial courts where explicitly statutory language does not grant the federal court exclusive jurisdiction. Unfortunately, the Trade-marks Act may not be explicit enough to preclude a declaration of invalidity by a provincial court. The language of s. 57(1) of the Trade-marks Act grants exclusive original jurisdiction to the Federal Court to order that any entry in the register be struck out or amended on the ground that the entry as it appears on the register does not accurately express or define the rights of the person appearing to be the registered owner of the mark. In addition, s. 20(1)(b) of the Federal Courts Act grants exclusive original jurisdiction to the Federal Court in any case in which it is sought to have any entry of the register of trade-marks made, expunged, varied or rectified. The subtle distinction drawn by the provincial courts in BC is that a declaration of invalidity is not an order to strike out or amend the register – and therefore does not necessarily fall under the exclusive jurisdiction of the court [see Woodpecker, at para 10].

The Position of the BCCA and its Potential Ramifications

For the interim order, the court concluded that it had the jurisdiction to issue an injunction against the defendants’ use of their registered marks on this basis, as well as jurisdiction flowing from s. 39 of the BC Law and Equity Act and the inherent jurisdiction of the court. As this appeal involved an interim injunction, it was unnecessary to conclude that the provincial courts in BC did in fact have jurisdiction to make a declaration of invalidity regarding an entry on the Trade-mark Register. The decision simply stands for the proposition that provincial courts in BC still view the effects of registration which were the subject of comment in Molson v Oland and Philip Morris v Marlboro Canada, as well as the effects of s. 57(1) of the Trade-Marks Act to be unsettled matters of law – indicating that they may not interpret the FCA’s interpretation to be binding for the purposes of provincial law.

The issue, if it goes to trial, could have important ramifications. A system of national registration which is subject to inconsistent provincial restrictions could pose obstacles to rights-holders. More importantly, the ability of provincial courts to make differing declarations of invalidity undermines the purpose of a national trade-mark registry, creating gaps in coverage for a system intended to provide an easy method of national protection. In any case, this decision shows that provincial courts are unwilling to limit their jurisdiction without a full hearing on the merits of the case, and that any restrictions imposed on that jurisdiction will not be taken lightly.

David Bowden is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.