November–December, 2016 Vol. 106 No. 6

MONETARY RELIEF ISSUE

The Award of Attorneys’ Fees in Exceptional Cases Under 15 U.S.C. § 1117(a) of the Lanham Act Bryan Wheelock, Kara Fussner, and Daisy Manning

Intention: Is It Truly Irrelevant to the Awarding of Damages or Profits in Canada and Abroad? Tony Bortolin

Making the Best Use of Experts to Evaluate Damages in Intellectual Property Disputes Bruce Abramson

Commentary: Glee—Unpicking the Reality of U.K. Monetary Awards Ian Lowe

Commentary: Monetary Remedies in Trademark Matters in Canada Nancy A. Miller

Book Review: Economic Approaches to Intellectual Property. Nicola Searle and Martin Brassell Alfred C. Frawley

Book Review: The Liability of Internet Intermediaries. Jaani Riordan Sheldon Burshtein

INTERNATIONAL TRADEMARK ASSOCIATION Powerful Network Powerful Brands

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OFFICERS OF THE ASSOCIATION RONALD VAN TUIJL .................................................................................................................. President JOSEPH FERRETTI ...........................................................................................................President Elect TISH L. BERARD .............................................................................................................. Vice President DAVID LOSSIGNOL ........................................................................................................... Vice President AYALA DEUTSCH ..................................................................................................................... Treasurer TIKI DARE ............................................................................................................................... Secretary MAURY TEPPER ........................................................................................................................ Counsel ETIENNE SANZ DE ACEDO ................................................................................... Chief Executive Officer

The Trademark Reporter Committee

EDITORIAL BOARD EDITOR-IN-CHIEF, CHAIR STAFF EDITOR-IN-CHIEF KATHLEEN E. MCCARTHY WILLARD KNOX

Senior Editors NEIL WILKOF

JESSICA ELLIOTT CARDON RUTH CORBIN GLENN MITCHELL ELISABETH KASZNAR FEKETE RAFFI V. ZEROUNIAN FABRIZIO MIAZZETTO PAMELA CHESTEK CHIKAKO MORI

Staff Editor Staff Editor BEVERLY HARRIS JOEL L. BROMBERG

Editors TSAN ABRAHAMSON MARIA BARATTA MARTIN J. BERAN DANIEL R. BERESKIN STEFANIA BERGIA LANNING BRYER SHELDON BURSHTEIN IRENE CALBOLI ROBERT CAMERON JANE F. COLLEN THEODORE H. DAVIS JR. ANNE DESMOUSSEAUX MEGHAN DILLON THOMAS F. DUNN SCOT DUVALL CLAUS M. ECKHARTT SHEJA EHTESHAM KAREN L. ELBURG MATTHEW EZELL NEMESIO FERNANDEZ-PACHECO SALVADOR FERRANDIS ALFRED FRAWLEY ALEX GARENS ALEXANDRA GEORGE DANIEL GLAZER ANDREW J. GRAY IV LESLEY MCCALL GROSSBERG ANN LAMPORT HAMMITTE

GUY HEATH ANNE HIARING HOCKING JANET L. HOFFMAN GANG HU DOMINIC HUI AHMAD HUSSEIN BRUCE ISAACSON AGLIKA IVANOVA E. DEBORAH JAY FENGTAO JIANG HE JING MARIA JOSE JIRON SIEGRUN D. KANE SUSAN J. KERI MIKE KEYES ROLAND KUNZE JOI MICHELLE LAKES SCOTT LEBSON NELS LIPPERT MARCUS LUEPKE VINCENT MARTELL J. THOMAS MCCARTHY NANCY A. MILLER GEORGE W. MOXON JOHN M. MURPHY PAUL MUSSELL SADAF NAKHAEI

SAURABH NANDREKAR AMANDA NYE JENIFER DEWOLF PAINE JEREMY B. PENNANT NEAL PLATT MICHIEL RIJSDIJK RACHEL RUDENSKY JEREMY SCHACHTER MATTHEW R. SCHANTZ MARTIN SCHWIMMER JENNIFER SICKLER AARON SILVERSTEIN ALEX SIMONSON GIULIO ENRICO SIRONI DEBBIE SKLAR WENDI E. SLOANE JERRE B. SWANN, JR. SCOTT THOMPSON CHINASA UWANNA ANJALI VALSANGKAR EDWARD E. VASSALLO MARTIN VIEFHUES CHARLES WEBSTER JORDAN WEINSTEIN JOHN L. WELCH JOSEPH WELCH BRYAN K. WHEELOCK JOSEPH YANG

Advisory Board MILES J. ALEXANDER WILLIAM M. BORCHARD CLIFFORD W. BROWNING LANNING G. BRYER SANDRA EDELMAN ANTHONY L. FLETCHER ARTHUR J. GREENBAUM

ROBERT M. KUNSTADT THEODORE C. MAX JONATHAN MOSKIN VINCENT N. PALLADINO JOHN B. PEGRAM ALLAN S. PILSON

ROBERT L. RASKOPF PASQUALE A. RAZZANO SUSAN REISS PIER LUIGI RONCAGLIA HOWARD J. SHIRE JERRE B. SWANN, SR. STEVEN M. WEINBERG

The views expressed in The Trademark Reporter are those of the individual authors and do not necessarily reflect those of INTA. The Trademark Reporter (ISSN 0041-056X) is published electronically six times a year by the International Trademark Association, 655 Third Avenue, New York, NY 10017-5646 USA. INTA, the INTA logo, INTERNATIONAL TRADEMARK ASSOCIATION, POWERFUL NETWORK POWERFUL BRANDS, THE TRADEMARK REPORTER, and inta.org are trademarks, service marks, and/or registered trademarks of the International Trademark Association in the United States and certain other jurisdictions.

Vol. 106 TMR 1037

INTENTION: IS IT TRULY IRRELEVANT TO THE

AWARDING OF DAMAGES OR PROFITS IN CANADA AND ABROAD?∗

By Tony Bortolin∗∗

I. INTRODUCTION Suppose you own a reputable Canadian company that has

innocently selected a mark for a product and worked hard to manufacture, market, and sell the product, only to find out that the mark happens to be registered or previously used by someone else. It is understandable that your company will likely have to stop using the mark in the other party’s domain, but should your company also be stripped of all its profits from such sales and otherwise have to compensate the plaintiff for all of its lost profits?

Like some other countries, Canada provides a cause of action for passing off at common law. It also has a trademark statute that provides for such causes of action as statutory passing off and trademark infringement.1 Unfortunately, again like some other countries, such statutory causes rarely specify whether intention2 is or is not an element of liability; the provisions are often silent, in which case they are open to interpretation.

Even apart from its possible role as an element of liability, the Canadian statute provides a general civil remedy which, since at least 1954, has expressly authorized the court to award damages or profits and certain other relief “as it considers appropriate in the circumstances.”3 Again, it does not expressly provide that intention can or cannot be taken into account as one of those “circumstances.” Arguably, this is also open to interpretation.

Within such area of uncertainty, there have been a number of decisions and commentaries in Canada and abroad indicating that defendant’s intention is “irrelevant” to the awarding of

∗ © 2016 Tony Bortolin (based on research to 2015). ∗∗ MacBeth & Johnson (Ontario law firm) and Dennison Associates (Canadian patent & trademark agency). (Any opinions herein are strictly those of the author.) 1. Canadian Trade-marks Act, RSC 1985, c. T-13 as amended, ss. 7, 19, 20. 2. For purposes of this article, “intention” may refer to a defendant’s “good faith” or “bad faith.” For example, bad faith may describe the intention that may be required as an element of liability while good faith may describe the intention that mitigates the quantum of monetary relief. 3. S. 53.2 (formerly s. 53) Canadian Trade-marks Act, supra note 1.

1038 Vol. 106 TMR substantial4 damages or profits in matters of passing off and trademark infringement.5 Such monetary relief might be awarded despite defendant’s good faith (or its lack of bad faith).

The premise of this article is that those decisions are based on one or more legal “mix-ups”6 and questionable rationales.7 This article thus concludes that the supposed irrelevance of intention should be reconsidered and handled more carefully by the courts and legislators as may be applicable.

The analysis below begins with a collection of judicial decisions indicating that intention is irrelevant.

II. TRADEMARK INFRINGEMENT AND PASSING OFF DECISIONS INDICATING THAT

INTENTION IS IRRELEVANT Within English common law, the earliest and most prominent

decision suggesting that intention is irrelevant within the law of passing off was Millington v. Fox (1838).8 Lord Chancellor Cottenham therein famously stated:

[The Court has] previously come to the conclusion that there was sufficient in the case to shew that the Plaintiffs had a title to the marks in question; and they undoubtedly had a right to the assistance of a Court of Equity to enforce that title. At the same time, the case is very different from the cases of this kind which usually occur, where there has been a fraudulent use, by one person, of the trademarks or names used by another trader. . . . . In short, it does not appear to me there was any fraudulent intention in the use of the marks. That circumstance, however, does not deprive the Plaintiffs of their right to the exclusive use of those names . . . .9

This holding has been considered as having “worked a fundamental change in the theory of trade mark protection.” Specifically, protection was thereafter perceived by some as being

4. This work questions the ability to award “substantial” damages or profits in the sense of an amount significantly greater than a token amount, sometimes referred to as “nominal.” In addition, in focusing on the relevance of intention in respect of such monetary relief, this work does not address the issue of whether intention should be relevant as a factor in assessing the particular issue of likelihood of confusion. Still further, intention must surely be relevant in respect of criminal liability, and punitive and exemplary damages. 5. As discussed in Part II. 6. As discussed in Part III. 7. As discussed in Part IV. 8. 3 Myl & Cr 338 at 352, 40 ER 956 (Ch) per LC Cottenham (acting in first instance). 9. Id. at p. 352 of My & Cr report (emphasis added); 961 of ER report.

Vol. 106 TMR 1039 based upon some sort of property right, rather than upon fraud (which, of course, requires fraudulent intent).10

A few years after Millington, the decision of Sandford V-C in Coats v. Holbrook (1845) contains a dictum that starts by indicating that defendant’s good faith was not “of any consequence.”11

In Coffeen v. Brunton (May 1849), U.S. Supreme Court Justice John McLean, while on circuit, held that, in view of Millington, the requirement of fraud was “much shaken, if not overruled” to the point that “an intentional fraud is not necessary to entitle the plaintiff to protection.”12 This principle was followed in such U.S. cases as Filley v. Fassett (1869)13 which was, in turn, followed in other cases.

The Rhode Island court in Davis v. Kendall (1850) applied the Millington principle in an action-on-the-case, indicating that the defendant is “still liable” whether the trademark is violated “by fraud or by mistake.”14

Page-Wood V-C in Welch v. Knott (1857) stated “[t]hat the defendant would not be entitled to use the plaintiff’s bottles in such a manner as, in fact, to mislead the public, although there might be no intention on his part to mislead, is clear. . . . In this Court the rule is clear, as laid down in Millington v. Fox.”15

Dale v. Smithson (1861)16 has been cited17 as holding that “[a]n action will lie for the piracy of a trade-mark, without regard to the defendant’s intention in using it.”

Many commentators suggest that the decisions of Lord Westbury in the 1860s establish trademarks as property, which, in turn, supports the notion that trademark protection is afforded regardless of defendant’s intention. For example, in Edelsten v. Edelsten (Jan. 28, 1863), Lord Westbury described two of the three issues in the case as: whether the plaintiff “had property” in the trademark and, if so, whether the defendants’ mark was

10. This has been confirmed by various authorities, including many without appreciating the distinction between requirements for injunctions and requirements for monetary relief discussed herein. As an example, see Prof. Grover C. Grismore, Fraudulent Intent in Trade Mark Cases, 27 Mich. L. Rev. 857, 860 (1929). Some other authorities as to the supposed effect of Millington are cited at various points below. 11. 2 Sand. Ch. R. 586 (N.Y.); Cox Am. TM Cases 20, 31 (spools of thread). 12. 4 McLean 516; 7 West Law J. 59; Cox Am. TM Cases 82; 2 Barb. Ch. R. 103; 5 F. Cas. 1184 (Cir. Ct. D. Ind.) (re Chinese Liniment). 13. 44 Mo. 173, 178 (S.C. Miss.); Cox Am. TM Cases 530, 540-41; 8 (N.S.) Am. L.R. 402 at 408 (cooking stoves). 14. 2 Rh. Is. 566; Cox Am. TM Cases 112 (Pain-Killer) (emphasis added). 15. 4 K & J 747, 751 (emphasis added); 70 ER 310, 312. 16. Cox Am. TM Cases 282; 12 Abbott Pr. Rep. 237 (N.Y. Common Pleas). 17. F.C. Brightly, Digest of the Decisions of the Courts of the State of New York, 1875 vol. 2 (Banks & Bros).

1040 Vol. 106 TMR substantially the same such that there was “an invasion” of that “property.” Lord Westbury also stated that the court will act “on the principle of protecting property alone, and it is not necessary for the injunction to prove fraud in the defendant . . . . The injury done to the plaintiff in his trade by loss of custom is sufficient to support his title to relief.”18

W.J. Ritchie C.J. for the majority of the Supreme Court of Canada in Canada Publishing Co. v. Gage (1885) stated that no one has the right to use the plaintiff’s mark in any way calculated to deceive, or aid in deceiving the public, to the detriment of the plaintiff “even when innocent of that purpose.”19

In Lever v. Goodwin (1887), Cotton, L.J. stated: “it is well known that both in trade-mark cases and patent cases, the plaintiff is entitled, if he succeeds in getting an injunction, to take either of two forms of relief” (damages or profits).20

In Cellular Clothing Co. v. Maxton (1889),21 Lord Chancellor Halsbury endorsed the principle allegedly indicated in Millington and stated that “[i]t is not necessary to establish fraudulent intention in order to claim the intervention of the court.”

Both Lever v. Goodwin and Cellular Clothing were cited by Kekewich J. in the passing off case of Saxlehner v. Apollinaris Co. (1897) In particular, he paraphrased Cotton L.J. by stating “the account of profits follows the injunction as a matter of course, as it does when the successful plaintiff asks it in a patent case.”22

Cellular Clothing and Saxlehner, in turn, were cited in a 1903 article on the subject of fraud by E.R. Coffin.23 The author was of the view that, while “[i]t appears that relief will not be given by the United States Supreme Court except in case of fraudulent intent,” the law in the English courts was “settled [that it was] immaterial whether the defendant’s motive be fraudulent or innocent.”24

Similarly, in the trademark infringement case of Boston Rubber Shoe Co. v. Boston Rubber Co. of Montreal (1902), Davies J., for the Supreme Court of Canada, stated “I doubt very much that it is necessary to find ‘fraud or fraudulent intention’ on the defendants’ part in order to grant relief.”25 Injunctive relief was 18. 1 De Gex J & Sm 185, 199, 46 ER 72, 78, at pp. 78‑79; 7 LT (Ch) 768, 769 (emphasis added). 19. 11 SCR 306 at 308-309. 20. 36 Ch D 5, 7; 4 RPC 492, CA Cotton LJ, Lindley LJ and Bowen LJ (emphasis added) affirming Chancery Division Chitty J. (1886), 36 Ch D 1; 4 RPC 492 (soap wrapper) 21. Cellular Clothing Co v. Maxton & Murray, [1899] AC 326 at 334-35. 22. [1897] 1 Ch 893 (emphasis added) (Hungarian bitter water). 23. ER Coffin, Fraud as an Element of Unfair Competition (1903) 16 Harv. Law Rev. 272 at 273 [1903 Coffin article]. 24. Id. at 273. 25. 32 SCR 315 at 328, and see 328-333.

Vol. 106 TMR 1041 granted and damages would have been granted as well except that they did not justify the expense of a reference in that case.26

Spalding v. Gamage (1915) is widely considered to represent a change in the law such that damages could be awarded against an innocent defendant in a passing off case.27 A speech by Lord Parker included the following: “Nor need the representation be fraudulently made. It is enough that it has in fact been made, whether fraudulently or otherwise, and that damages may probably ensue . . . .”28 And also: “It is sufficient to say that the misrepresentation being established, and being in its nature calculated to produce damage, the plaintiffs are prima facie entitled both to an injunction and to an inquiry as to damage . . . .”29

This principle, that intention is irrelevant as to liability, was also suggested by the Supreme Court of Canada in Robert Crean & Co. v. Dobbs & Co. (1930) where Lamont J. stated “[n]o one has a right to use a mark by which another’s goods are known for the purpose of passing off his goods as the goods of the other and, even when he is innocent of that purpose, he must not use it in any way calculated to deceive.”30

Sir Wilfred Greene M.R. in Draper v. Trist (1939) famously stated:

There is one matter which I can get rid of at once . . . I should be prepared myself to hold, if it were necessary to do so, that now, both in claiming damages and in claiming purely equitable relief, whether by way of injunction or by way of account of profits, or both, fraud is not a necessary element in the transaction.31 This dictum was approved in such cases as Sund v.

Beachcombers Restaurant Ltd. (1960)32 and Noshery Ltd. v. Penthouse Motor Inn Ltd. et al. (1969),33 which, in turn, were cited in subsequent cases.

26. Id. at 334. 27. As discussed, e.g., in Damages Against the Innocent Infringer in Passing Off and Trade Mark Infringement (1985) [Can.] IPJ 201, 204 by Catherine P. Best. Also in Damages against the Innocent Infringer [1996] EIPR 204 by R. Kelbrick. Although even these articles did not seem to recognize the mix-ups discussed herein. 28. A G Spalding & Bros v. A W Gamage Ltd (1915), 84 LJ Ch 449, 113 LT 198, 31 TLR 328, [1914-15] All ER Rep 147 at 149, 32 RPC 273 at 283. 29. Id. at 287 of RPC (emphasis added). 30. [1930] SCR 307 at 314 (emphasis added). 31. Draper v. Trist and Trisbestos Brake Linings Ltd, [1939] 3 All ER 513 at 517, [1939] 56 RPC 429 (CA) at 434 (emphasis added). 32. 34 CPR 225, 229 (BC SC). 33. 61 CPR 207, 218 (Ont HCJ) per Addy J (by citing the Sund case, id.).

1042 Vol. 106 TMR

In Saville Perfumery Ltd. v. June Perfect Ltd. and Woolworth & Co. Ltd. (1941), the plaintiff was awarded an election as between damages or an accounting (in a case involving both passing off and trademark infringement) without consideration of any good faith.34

In Parker-Knoll v. Knoll International (1962), Lord Denning stated: “It is not necessary that [the offending mark] should be intended to deceive or intended to cause confusion.”35 Similarly, Lord Guest in the same case stated “proof of intent to deceive is unnecessary” and reiterated the notion that it “was an essential element” only as part of the original doctrine “until the intervention of equity.”36

The Quebec Court of Appeal decision in Hébert & Fils c. Desautels (1971)37 has been cited, and even applied,38 as indicating that bad faith is not required to establish civil liability, again whether for passing off or trademark infringement.

In India, the Delhi High Court observed in Prina Chemical Works v. Sukhdayal & Co (1974) that “[i]t is now well settled that proof of fraud is unnecessary, whether the relief asked for is an injunction or damages.”39

In Marc-Aurele v. Ducharme (1976), Dube J. of the Canadian Federal Court, without citing authority, stated: “We are not concerned here with fraudulent intention on the part of the defendant. . . . Once the Court is satisfied that the goodwill has been interfered with and there has been confusion, then damages are presumed at law.”40

In Stringfellow v. McCain Foods (G.B.) Ltd. (1984), the English Court of Appeal stated that “the cause of action depends on the right of the plaintiff and the injury done to that right, not on the intention or motive of the defendant.”41

34. 58 RPC 147 (HL). 35. [1962] RPC 265, 273 (HL). 36. Id. at 290, and see 289. This case involved both passing off and infringement of a registered trademark. 37. [1971] CA 285, 291 (Qu); the plaintiff obtained a trademark registration after commencing the proceedings but before trial, and thus the decision related to both passing off and trademark infringement. 38. Compro Communications Inc. v. Communications Promo-Phone (1991), 41 CPR (3d) 260 at 272 (Qu S Ct). 39. ILR (1974) Delhi Vol. I 545 at para. 24 (DB Delhi High Court) (emphasis added). The Court applied Draper v. Trist (1939), above note 31, which is discussed further herein. It also cited Oertii v. Bowman (1957), which is discussed in text below at note 236. This feature of Prina Chemical Works was, in turn, approved in such cases as Crayons Advertising Ltd v. Crayon Advertising (2014), IA No. 11898/2013, para. 29 (Delhi High Court) stating: “Hence, actual fraud or damage is unnecessary is an action for passing off.” 40. 34 CPR (2d) 155, 162 (Can FTD) (emphasis added). 41. [1984] RPC 501 at 533-34 (emphasis added).

Vol. 106 TMR 1043

In Consumers Distributing Co. v. Seiko (1984), the Supreme Court of Canada stated:

[T]he passing off rule is founded upon the tort of deceit, and . . . the original requirement of an intent to deceive died out in the mid-1800’s . . . . See: Millington v. Fox (1838), 3 M. & Cr. 338, at p. 352; Perry v. Truefitt (Dec 1842), 6 Beav. 66, at p. 68, 49 E.R. 749, at p. 750; Cellular Clothing Co. v. Maxton & Murray, [1899] A.C. 326, at p. 334.42

In Ciba-Geigy Canada Ltd. v. Apotex Inc (1992),43 the same Court approved that passage. The Court also approved44 a passage from the House of Lords’ decision in Reckitt & Colman Products Ltd. v. Borden Inc. (1990) where Lord Oliver stated that passing off involves a misrepresentation “whether or not intentional.”45 Coincidently, Lord Oliver in Reckitt also stated that intention was “strictly irrelevant to the result”46 and referred to “the issue of fraud” as something “which is now no longer material.”47

In ConAgra Inc v. McCain Foods (Aust) Pty Ltd (1992), Lockhart J. of the Federal Court of Australia stated: “An intention by the defendant to deceive has not been a necessary ingredient in the cause of passing off since 1838 when Millington v. Fox decided that equity concerned itself with the protection of property rights of the plaintiff.”48

In Gillette UK Limited v. Edenwest Limited (1994),49 a relatively recent and prominent decision, the court purported to review the authorities and then expressly declared the principle that substantial monetary relief could be ordered despite innocence in respect of both passing off and trademark infringement in the U.K. Blackburne J. came to this conclusion first regarding trademark infringement.50 He then continued to review dicta regarding the issue in passing off cases such as those mentioned above and stated “those dicta point the way and justify me in the view . . . that dishonesty on the defendant’s part is not necessary before a plaintiff can recover damages (other than merely nominal damages) for passing off.”51 In addition, he stated: 42. [1984] 1 SCR 583 at 601 per Estey J [Seiko] (emphasis added). 43. [1992] 3 SCR 120 at 133 per Gonthier J [Ciba-Geigy]. 44. Id. at 142. 45. [1990] UKHL 12, [1990] 1 All ER 873 at 880 (mid), [1990] 1 WLR 491 at 499, [1990] RPC 341 (lemon juice plastic container shaped like lemons) [Reckitt]. 46. Id. 47. Id. at 881 (top). 48. [1992] FCA 159, 106 ALR 465, at para. 124 (Austr FCA) [ConAgra v. McCain Foods (1992)]. 49. [1994] RPC 279 (HCJ–Ch) Blackburne J. 50. Id. at 291 (of RPC). 51. Id. at 293 (of RPC) (emphasis added).

1044 Vol. 106 TMR “I can see no good reason why, if damages are recoverable from the innocent infringer of a registered trademark, they should not equally be recoverable for innocent passing off.”52

Prof. Wadlow later commented: “Although neither equity nor the common law would award pecuniary remedies against a wholly innocent defendant, [in view of Gillette v. Edenwest] it is doubtful if this partial defence has survived any useful extent in modern law.”53

Kerly’s Law of Trade Marks has taken an even tougher position on innocent defendants subsequent to Gillette v. Edenwest. This prominent long-standing text contains the flat statement that “[a] defendant cannot avoid an order for an inquiry by showing that he infringed innocently. The claimant has a right to damages regardless of the defendant’s state of mind, and that is so regardless of whether the cause of action is infringement of a registered mark, or passing off.”54

In Enterprise Rent-A-Car Co. v. Singer (1996), W. McKeown J. stated that “it is not necessary for a plaintiff to prove bad faith on the part of the defendants in order to prove passing off” and “[i]n passing-off cases intention to pass off is irrelevant.”55

In Kirkbi AG v. Ritvik Holdings Inc. (2005), the Court cited its decisions in Consumers Distributing Co. v. Seiko (1984) and Ciba-Geigy Canada Ltd. v. Apotex Inc (1992) in stating the following regarding passing off: “Misrepresentation may be wilful and may thus mean the same thing as deceit. But now the doctrine of passing off also covers negligent or careless misrepresentation by the trader.”56

In a decision concerning the BARBIE trademark (2006),57 the Court reiterated the above passage in Kirkbi. The BARBIE case also contained a dictum that has been interpreted58 as further supporting the principle that bad faith is not a prerequisite to establish passing off. The dictum includes the following:

[T]he relevant perspective of s. 6(2) of the Trade-marks Act [regarding what constitutes “confusion”] is not that of the respondent [subjective] but rather the perception of the

52. Id. at 291 (of RPC). 53. Wadlow, The Law of Passing-off, 2004. p. 313 (sect 5E; 5-43). 54. Kerly’s Law of Trade Marks and Trade Names (14th ed., 2005) at 19-140 (p 674). 55. [1996] 2 FC 694, 66 CPR (3d) 453 at 482 (emphasis added); aff’d (1998), 79 CPR (3d) 45 (FCA) (Canada). 56. [2005] 3 SCR 302 at para. 68 [Kirkbi] (case involving LEGO blocks) (emphasis added). The case was under s. 7(b) of the Canadian statute for a statutory form passing off. 57. Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 SCR 772 para. 27 per Binnie J. 58. E.g., in Passing Off Section 7 of the Trade-Marks Act (2010) http://www.robic.com/admin/pdf/892/404E-BGA-2010.pdf.

Vol. 106 TMR 1045

relevant mythical consumer [objective]. Mens rea is of little relevance to the issue of confusion: Lexus.59 It has been established since Edelsten v. Edelsten (1863)60 that a trade-mark is a proprietary right. If, as the appellant says, the respondent’s activities have trespassed on the marketing territory fenced off by its BARBIE trade-marks, it would be no defence for the respondent that it did not intend to trespass.61 In Remo Imports Ltd. v. Jaguar Cars Ltd. (2007), the

Canadian Federal Court of Appeal reiterated the notion expressed in Kirkbi that intention is irrelevant.62

In view of the above, trying to defend the innocent infringer from having to pay substantial monetary relief appears to be hopeless. But the above weight of authority is based upon one or more legal mix-ups as discussed below.

III. VARIOUS MIX-UPS IN THE ABOVE DECISIONS Mix-up #1: Not Distinguishing the Requirements That Are Merely Applicable to Injunctive Relief

It appears to be entirely correct that defendant’s intention is irrelevant to the issue of awarding an injunction at trial. This principle is not questioned herein. However, this principle has led to a mix-up in the law as if intention is irrelevant even for the purposes of awarding and assessing substantial monetary relief.

To understand why defendant’s intention can still be relevant to the issue of substantial monetary relief, it needs to be understood why defendant’s intention has been understandably held to be irrelevant to the issue of awarding a permanent injunction (also referred to as a “final” or “perpetual” injunction). The simple explanation is that the defendant is inherently no longer innocent after the defendant becomes aware that its activities are causing public deception (or “confusion”), and that the plaintiff has superior rights (together with any other elements of liability), especially after such issues have been conclusively established at trial. Regardless of the defendant’s good faith prior to trial, any continued use of the same mark after such conclusive pronouncements at trial would obviously be intentional.

59. Toyota Jidosha Kabushiki Kaisha v. Lexus Foods Inc., [2000] FCJ No. 1890, [2001] 2 FCR 15; 9 CPR (4th) 297 (FCA) para. 11. There, the Federal Court of Appeal in Canada strongly indicated: “The decision cannot be based on whether someone knew about the existence of the trade-mark or not. There is no doctrine of mens rea in the field of trade-marks.” 60. Supra note 18. 61. Supra note 57 at para. 90 (emphasis added). 62. 2007 FCA 258 (CanLII), [2007] FCJ No 999 (QL), [2008] 2 FCR 132, 60 CPR (4th) 130, at para. 89.

1046 Vol. 106 TMR

As a related matter, the cases stating that defendant’s bad intention is not required did not necessarily indicate that intention is not required for significant damages or an accounting. That is, most of the earlier dicta did not actually indicate that intention was irrelevant even as to the issue of monetary relief, but simply that it was irrelevant for the purposes of obtaining a permanent injunction. Again, the element of intention is understandably imputed for the purposes of the defendant’s actions going forward, and it has thus been properly removed for the purposes of injunctive relief. But such basis for removing it for the purposes of injunctive relief did not provide a basis for removing it for the purposes of monetary relief. Authorities that have subsequently gone that extra step and mistakenly suggested that intention is not relevant to monetary relief have, with great respect, failed to recognize the distinction between injunctive and monetary relief.

Contributing to the mix-up is the fact that the jurisdiction of the English courts until the mid-1800s was divided such that the courts at law could award damages but not injunctions. Injunctions could only be obtained from the courts of equity (chancery). It is true that the courts of equity could also award a form of monetary relief, by way of an accounting of profits, but such monetary relief was not always sought, let alone granted, in the relevant cases.

In view of the above, it is most significant that certain decisions, such as Millington v. Fox and Coffeen v. Brunton, merely addressed injunctive relief.63 Further attention may also be required to the carefully chosen wording within the excerpt above where Cottenham L.C. stated the case before him was “very different from the cases of this kind which usually occur.”64 In context, this phrase means that the case was different from cases seeking monetary relief. In addition, his Lordship held the plaintiffs had a right “to the assistance of a court of equity to enforce that title.”65 Looking again at the context, this phrase means “enforc[ing]” that title by way of enjoining the infringer, rather than awarding monetary relief. Similarly, his Lordship held that the lack of fraudulent intention does not deprive the plaintiffs “of their right to the exclusive use” of their names.66 Again, this phrase does not necessarily go beyond merely enjoining the infringer. Cottenham L.C. even refused to award costs to the plaintiff in that case. As a result, his Lordship was emphasizing 63. In particular, some authorities may not have appreciated that, in Millington, an accounting of profits was originally sought but was dropped by the plaintiff prior to the decision; above note 8 at p. 352, 355 of My & Cr report; 962, 962-3 of ER report. As to Coffeen, see supra note 12. 64. Id. 65. Id. 66. Id.

Vol. 106 TMR 1047 the good faith of the defendants — not to enunciate a new principle that an accounting could be ordered despite good faith but to support the refusal to award costs despite the general practice of awarding costs to a successful party.

The distinction between the relevance of intention for the purposes of awarding damages or profits, and its irrelevance (or being imputed67) for the purposes of awarding injunctions, was set forth expressly in other cases. For example, about four years after Millington, Maule J. in Crawshay v. Thompson (1842) stated that the effect of the decision in Millington was that “the defendants would have been in the wrong if they had continued to use the plaintiff’s marks” after it was “clearly shewn” that the use of this mark would have been an injury to the plaintiffs.68

Millington was also correctly understood in Coats v. Holbrook (1845).69 While, as noted, Sandford V-C stated that good faith was not “of any consequence,”70 a broader extract from that sentence reads that good faith was not “of any consequence in respect of the injunction.”71 In addition, good faith was indeed considered in that decision as a possible “consequence” on the issue of whether to award costs in the same way it was apparently relevant in respect of costs in Millington. So good faith was not of any “consequence” or relevance as to an injunction, but was relevant as to costs. Taking good faith into consideration for the purposes of awarding costs is akin to taking good faith into consideration for the purposes of awarding damages and an accounting of profits. This is distinct from the question of whether to award an injunction, which speaks to the future, where the conduct is inherently no longer innocent. Costs, damages, and profits all address conduct prior to trial which may have been innocent, whereas injunctions address conduct after trial.

In Amoskeag Mfg. Co. v. Spear (Oct. 1849 N.Y.), Duer J. certainly understood the “true explanation” of Millington, when he stated “where no fraud can be justly imputed, where the use of the name or style originated in mistake, and not in design . . . the party may be exempted from damages and cost” although “the continuance of the use may be justly restrained, since it involves a violation . . . that, if persisted in, with a knowledge of the fact, would be fraudulent.”72 Similarly, he stated that “an injunction

67. The possibility that intention is imputed rather than irrelevant is discussed further in Mix-up #5. 68. [1844] 4 Manning & Granger 357, 383-84; 134 ER 146, 157 (emphasis added). 69. Supra note 11. 70. Text supra note 11. 71. Supra note 11 (emphasis added). 72. Cox Am. TM Cases 87 at 94 (emphasis added).

1048 Vol. 106 TMR must be granted whenever the public is in fact misled, whether intentionally or otherwise.”73

This distinction — that bad faith was required for damages rather than for an injunction — was also noted in the U.S. case of Peterson v. Humphrey (1857).74

Cartier v. Carlile (1862) is a case in which profits were awarded against the defendant, and in doing so Sir John Romilly M.R. stated “I am of the opinion that the liability to account for the profits is incidental to the injunction.”75 However, the distinction between injunctive relief and the ability to “recover” (meaning to recover funds, whether in equity or at law) was set forth in the argument on behalf of the defendant76 and Sir Romilly stated “I consider the rule at law and in equity to be the same.”77 At the time, fraudulent intention was still relevant to recover monetary relief at law and in equity. Sir Romilly did not say innocence was irrelevant.

In addition, it needs to be understood that Sir Romilly was addressing the specific situation where there might not be intention in the usual sense but rather in the form of willful blindness. In particular, he held: “[T]he fact of the defendant not knowing to whom the trade mark he copies belongs, does not, in the slightest degree, affect the right of the owner to an injunction and to an account of the profits . . . .”78 Otherwise, as he explained within the same passage, there would be “serious consequences” in that a defendant could escape liability by “carefully abstaining” from inquiring as to who owned the mark.

Such context also helps to explain Sir Romilly’s comments within the decision that intention is to be imputed (only) in “these” cases.79 He indicated that one question in such cases is “whether the mark used by the Defendant is a colorable imitation of a genuine trade mark of the Plaintiff.”80 In context, the term “colorable” meant that the imitation was intentional. This is confirmed by his next comment that “that is what in Crawshay v. 73. Id., n. 72 at 95m (emphasis added). This reading of his decision is further confirmed at p 101 where Duer J. said that, even if he could wholly acquit the defendants of any fraudulent intent, it still remains true they have adopted a similar design, and that the public has been misled and that “the concurrence of these facts is alone sufficient to render it the duty of the court to interfere by an injunction.” (emphasis added). 74. Cox Am. TM Cases 212, 214 and in the headnote; 4 Abb Pr 394; (NY) Mitchell J (a Broadway partnership case). 75. (also spelled as “Carlisle” in the side-note of the report, but spelled as “Carlile” in the body of the report) 31 Beav. 292, 298; 54 ER 1151. 76. Id. at 296-7. 77. Id. at 297. 78. Id. at 298 (emphasis added). 79. Id. at 298. 80. Id. 75 at 297.

Vol. 106 TMR 1049 Thompson (1842) was decided by the jury.”81 One of the questions decided by the jury in Crawshay was explained by Justice Maule as follows:

The question for the jury was, whether such a representation [meaning “whether the mark itself represented that the iron was manufactured by the plaintiff”] was in fact made. It was left to them to say, whether the mark was used by the defendants with an intention to deceive. And that was a proper question to leave . . . .82

That Sir Romilly’s use of “colorable imitation” refers to intentional imitation is confirmed by his subsequent sentence in Cartier where he says: “[I]f it be found that there has been a colorable imitation of a trade mark, it follows that the person making it intended to imitate the genuine trade mark belonging to some individual, though he might not have known his name . . . .”83 Again, he was not saying intention is irrelevant as to monetary relief, but that it could be deduced or imputed in such cases. Sir Romilly’s comments in Cartier are also better understood by appreciating that the defendants were supplied by a customer with a sample of the plaintiff’s cotton and labeling thereof, all with the intention that the defendants prepare an imitation for that customer to then sell; the defendants mindfully prepared an imitation of a label that clearly belonged to someone else. The defendants even imitated the plaintiff’s manner of wrapping and their cross design. Thus, the imitating was quite intentional. The only defense based on good faith was that the defendants did not know who owned those markings. In other words, defendants knew they were copying someone’s markings, they just did not know whose.84

The above reading of Sir Romilly’s decision in Cartier is confirmed by his decision in Moet v. Couston (1864) in which he refused an accounting of profits because the defendants had no knowledge that the champagne they were reselling was not truly made by the plaintiff.85

Some have expressed the view that Cartier and Millington constituted a line of authority supporting the awarding of monetary relief against innocent infringers and thus find it 81. Id. (emphasis added). 82. Supra note 68 at 381 (of Manning & Granger) (emphasis added), p. 146 (of ER). 83. Supra note 75 at 298 (emphasis added). 84. The other defense discussed in the decision was that certain markings were descriptive, but no evidence was discussed within the decision so as to corroborate this. Overall, by no means was this a case where a defendant properly established the good faith belief that the markings were descriptive, or that they had, for example, selected a trademark which happened to be already in use by someone else completely as a coincidence, or where the defendant was simply reselling some goods which they purchased thinking they were genuinely made by the plaintiff, and so forth. 85. 33 Beav. 578; 55 ER 493; 10 LT Rep (NS) 395.

1050 Vol. 106 TMR surprising that Sir Romilly did not apply Cartier in Moet v. Couston even though Cartier had been cited in Moet v. Couston.86 However, Cartier and Millington did not constitute such a line of authority. In addition, Sir Romilly in Moet v. Couston went further than merely cite Cartier; he discussed it, and distinguished it, when he held:

If a man manufactures goods himself and puts upon them the trade-mark of another, though he may not know to whom that mark belongs [precisely as in Cartier], he must at least know that he himself had no right to the mark. That knowledge makes him liable to account for the profits he may have realised by his conduct. But if a man [as in this case, Moet v. Couston] buys goods from a third party, believing them to be genuine, while in fact they are spurious, it is not until he has been told that they are so that he can be considered to be guilty of any fraud, or to be liable to render any account.87 As to the decisions of Lord Westbury in the 1860s supposedly

establishing trademarks as property to be protected regardless of defendant’s good faith, he did not specifically state that intention is not required for the purposes of obtaining monetary relief. On the contrary, his Lordship instead clearly understood the distinction between the requirements for monetary and injunctive relief. For example, in Edelsten v. Edelsten (Jan. 28, 1863), he precisely identified the third of the three issues in the case as “whether the defendants have used the plaintiff’s trade-mark with knowledge of the right of the plaintiff.”88 And when Lord Westbury stated “it is not necessary . . . to prove fraud,”89 a fuller extract from that statement shows that he was very careful in saying “it is not necessary for the injunction to prove fraud.”90 His recognition of the distinction between intention not being necessary for an injunction and it being necessary for a monetary award is also reflected where, still in the same passage, his Lordship stated:

The last question [namely, “whether the Defendants have used the Plaintiff’s trade mark with knowledge of the right of the Plaintiff”] is material with reference to the extent of the relief to be granted. For although it is well founded in reason, and also settled by decision, that if A. has acquired property in a trade mark which is afterwards adopted and used by B. in ignorance of A.’s right, A. is entitled to an injunction; yet he is not

86. James Edelman, Gain-Based Damages: Contract, Tort, Equity and Intellectual Property (Hart Publishing 2002) at 237-238. 87. Supra note 85 (emphasis added). 88. Supra note 18 (LT) at 769 (De Gex J & Sm) at 199 (ER) at 78. 89. As quoted above in text at note 18. 90. Supra note 18 (emphasis added).

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entitled to any account of profits or compensation, except in respect of any user by B. after he became aware of the prior ownership.”91

Such comments indicate that Lord Westbury did not in any of his decisions actually remove the element of fraudulent intention for the purposes of monetary remedies, despite any of his famous comments, in this decision and in others, that trademarks constitute property.92

Such comments by Lord Westbury in Edelsten also help clear up any confusion he may have caused by his comments during the first level of appeal in Leather Cloth Co. v. American Leather Cloth Co. (Dec. 21, 1863). For example, in the opening part of his decision he stated:

[T]he right to give relief to the trader whose trade has been injured by the piracy appears to have been originally assumed by reason of . . . the necessity of protecting property . . .

. . . The court will grant relief, although the deft. has no intention of selling his own goods as the goods of the plt. or of practising any fraud either on the plt. or the public. If the deft. adopts a mark in ignorance of the plt.’s exclusive right to it, and without knowing that the symbols or words so adopted and used are current as a trade mark in the market, his act, though innocently done, will be a sufficient ground for the interference of the court. . . . 93

However, this needs to be understood in context, not only of his rulings in such other cases as Edelsten,94 but even of a larger extract from the above passage in Leather Cloth as follows:

Upon a review of the numerous cases which have been decided in this court on the subject of trade-marks, there appears to be some uncertainty and want of precision in the language attributed to different judges, as to the ground on which a court of equity interferes to protect the enjoyment of a trade-mark . . . At law the remedy for piracy of a trade mark is by an action on the case in the nature of a writ of deceit. This remedy is founded upon fraud . . . In equity the right to give relief to the trader whose trade has been injured by the piracy appears to have been originally assumed by reason of the

91. Supra note 18 (all emphasis added). 92. There are also other reasons as to why Edelsten does not actually support the notion that intention is irrelevant with respect to monetary damages, discussed below, e.g., in text at notes 204-212. 93. 4 De Gex J & Sm 137, 33 LJR (NS) Ch 199, SC 12 WR 289, Cox Am. TM Cases 686, SC 10 Jur (NS) 81; aff’d (1865), 11 Jur (NS) 518, LR 11 HLC 523; 11 ER 1435 (1863) 32 LJ Ch 548; (1863) 8 LT 227 (emphasis added). 94. As just discussed in text at notes 88-92.

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inadequacy of the remedy at law [which remedy was merely monetary at the time], and the necessity of protecting property, of this description by injunction [which remedy at the time could only be obtained in equity].

I]t is not requisite for the exercise of the jurisdiction that there should be fraud or imposition practised by the deft. at all. The court will grant relief [“by injunction” as mentioned in the preceding paragraph], although the deft. has no intention of selling his own goods as the goods of the plt. or of practising any fraud either on the plt. or the public. If the deft. adopts a mark in ignorance of the plt.’s exclusive right to it, and without knowing that the symbols or words so adopted and used are current as a trade mark in the market, his act, though innocently done, will be a sufficient ground for the interference of the court [again “by injunction”], as is plain from the decision of Lord Cottenham in the case of Millington v. Fox, to which I entirely assent. . . .95

He concluded this discussion by stating “the true principle, therefore, would seem to be that the jurisdiction of the Court in the protection given to trade marks rests upon property, and that the Court interferes by injunction. . . .”96

Within this portion of the decision, Lord Westbury also approved the words of Lord Thurlow in Webster v. Webster (1791)97 that, ‘[t]he fraud upon the public is no ground for the plaintiff’s coming to this court.’ But again this was for the purposes of discussing the ability of a plaintiff to come to this court, meaning the court of equity for an injunction. It should also be clear from the larger extract above from Leather Cloth that Lord Westbury was not contesting, but actually confirming, that fraudulent intention was indeed required for the purposes of relief within the courts at law, meaning for damages (“At law the remedy for piracy of a trade mark . . . is founded upon fraud”98).

In view of all the above, there was nothing in the comments of Lord Westbury intended to state that it was unjust that the courts at law required fraudulent intention for the purposes of monetary relief.

It is proposed that the distinction between intention not being necessary for an injunction and it being necessary for monetary relief was also understood in the decision of Page Wood V-C at first instance in Leather Cloth Co. v. American Leather Cloth Co. (Jul. 8, 1863). The Vice-Chancellor referred to Millington as a case

95. 4 De Gex J & Sm at 138-141 (emphasis added). 96. 4 De Gex J & Sm at 142 (emphasis added). 97. (1791), 3 Swanst. 490, 36 ER 949. 98. This is from the passage quoted at supra note 95.

Vol. 106 TMR 1053 where the court “will grant an injunction where no evil intent can be attributed to the Defendant.”99 His Lordship added that the court of equity may hold that the defendant will commit a fraud “if he continue to do the act.”100 This was reiterated by Wood V-C in his decision at first instance in McAndrew v. Bassett (Mar. 4, 1864), where he stated:

I could never understand why the case of Millington v. Fox introduced any difficulty. The principle of Millington v. Fox is this, that although a person has used another man’s trade-mark perfectly innocently, if he continues for one moment after he has been told of it to use another man’s trademark, he does so fraudulently. . . .101

A couple of years later, Page Wood V-C in Ainsworth v. Walmsley (1866) held:

The use of the name of another manufacturer, whether done scienter102 or not, is an interference with his business, which this court will interpose to prevent, on the ground that the Defendant is endeavoring to pass off the goods of his own, or somebody else’s manufacturer, as the manufacture of the Plaintiff.103

In view of the emphasized wording, the dictum reads like another indication that intention is irrelevant. However, such dictum needs to be read in the context of the jurisprudence just discussed. Moreover, even this excerpt itself indicates merely that the court will interpose “to prevent” such conduct, meaning, by way of injunctive relief, not monetary relief. In addition, after this dictum, the Vice-Chancellor proceeded to discuss, as a separate point, how far the defendants were “answerable” (monetarily) for the use of the plaintiff’s name, and he ultimately denied such monetary relief on the very basis of the defendants’ innocence.104 Accordingly, these cases cannot be soundly cited as supporting the notion that monetary relief can automatically be granted as against an innocent infringement.

Singer Manufacturing Co. v. Wilson (Dec. 13, 1877)105 is another case where the distinction between the relevance of 99. 1 Hem & M 271 at 287 (Page Wood V-C) (Ch) (emphasis added), reversed on other grounds. 100. Id. (emphasis added). 101. [1864] 33 LJ Ch 561 at 564 (emphasis added); aff’d, LC Westbury (May 7, 1864), [1864] 33 LJ Ch 566, 4 De Gex J & Sm 380; 10 Jur (NS) 492. 102. Here the term scienter is used as “knowingly” (an adverb). 103. [1866] LR 1 Eq 518, 524-25 (emphasis added) (case cited by the SCC in the BARBIE case). 104. Id. (supra note 103) at 526-27. 105. [1878] 47 LJR (NS Ch D) 481; 3 AC 376; 34 LT Rep (NS) 858; (HL w Lord Cairns); an appeal from (1876), 2 Ch D 435 at 453, (CA per Mellish LJ).

1054 Vol. 106 TMR defendant’s good faith for the assessment of monetary relief and its lack of relevance for injunctive relief is explained by at least some of the justices. The House of Lords was unanimous in indicating that fraudulent intention need not be proved to obtain protection for a trademark, but again this was protection in the form of a perpetual injunction. While Lord Chancellor Cairns prominently indicated that “[i]n this Court, the rule [that defendants’ innocence was irrelevant] is clear, as laid down in Millington v. Fox,”106 he was merely discussing the irrelevance of defendants’ innocence as to the injunction. This is why, in the same passage, his Lordship commented “[h]ow far that doctrine [of ignoring innocence] is capable of being reconciled with the cases at law which the scienter has been held to be essential in order to enable the plaintiff to recover (that is to recover damages), it is not material to consider.”107 He clearly understood the distinction between intention not being necessary for an injunction and it being necessary for monetary relief, especially since he was counsel in such cases as Edelsten, Moet v. Couston, McAndrew v. Bassett, and American Leather Cloth.

Similarly, Lord Blackburn in Singer Manufacturing Co. v. Wilson made it clear:

This is not an action to recover damages for a wrong already committed, but an injunction to prevent a wrong threatened . . . . The injunction should be granted (whatever might be the case as to the account) whether the defendant heretofore meant it to produce that effect or not . . . . I am not as yet prepared to assent either to the position that there is a right of property in a name, or, which seems to me nearly the same thing, to assent, to its full extent, to the proposition that it is not necessary to prove fraud. Neither position has, I think, ever been the ground on which a decision of this House has proceeded.108

Lord Chancellor Cairns further explained in this case that, even if the defendant “was ignorant of the plaintiffs’ right in the first instance, he is, as soon as he becomes acquainted with them, and perseveres in infringing upon them, as culpable as if he had originally known of them.”109 The same point was indicated by

106. Id. at 489 [of LJR]. 107. Id. at 489 [of LJR] (emphasis added). Lord O’Hagan said the same at 491; e.g.: “the law ought not to permit, and will not permit, the continuance of the invasion whatever may have been its origin” (emphasis added). 108. Id. at 493 [of LJR] (emphasis added). 109. Id. at 488 [of LJR] (emphasis added). This decision, and even this very dictum, was cited as if it supports monetary relief despite good faith, in Callmann on Unfair Competition, Trademarks, and Monopolies, s. 23:69, titled Monetary Relief—Wrongful Intent (at note 9, on pp. 23-791 of 2008 rel).

Vol. 106 TMR 1055 Lord Blackburn in this case as follows: “[T]he injunction should be granted, whether the defendant heretofore meant it to produce [passing off] or not; for if he persevered, as he threatened to do in this course, after learning that it does produce this effect, he would (unless in very exceptional cases) do a wrong, injuring the plaintiffs, and should be prevented from doing that wrong.”110

As explained by James L.J. in Johnston v. Orr Ewing (1882): It is not necessary for this case [being for injunctive relief] to decide that a man actually intended to tell a lie . . . . [S]upposing by some accident a man had inadvertently used a ticket [meaning a tag, label, mark] which was so calculated to deceive the ultimate purchasers, and therefore so calculated to injure the Plaintiffs in their legitimate right of property in a trade mark, the moment the attention of the Defendants or any persons in their position is called to the fact of the similarity of the two marks, and to the complaint of the persons who owned the first mark, that it was likely to injure them, it was his duty to immediately discontinue the use of the trade mark complained of; and however honest or inadvertent the original mistake may have been, the continuation of the use of it after that was pointed out is itself sufficient evidence that of a fraudulent intention. The fraud would then consist in continuing to do it, even if there had been an original inadvertence in the use of it.111

Baggallay L.J. in the same proceedings stated the same, in his words: “[E]ven if they had done it through ignorance or through inadvertence they cannot be allowed to continue to use a trade mark of a character which would be calculated to lead to the deceit . . . .”112

The distinction between injunctive and monetary relief was explained, at length, by Lord Esher M.R. of the same court, in Turton v. Turton (1889) where he quoted and discussed113 some of the dicta of Lord Blackburn in Singer Manufacturing Co. v. Wilson.114 For example, Lord Esher stated:

If you were asking for damages for what was passed . . . you have to prove he had intended it. You would have to prove that what he was doing was fraudulent. That is clear. . . . But he [Blackburn L.J.] goes on and says that under those circumstances the plaintiff having shown the facts and what

110. Id. at 493 [of LJR]. 111. 42 LT Rep NS 67 at 69 (emphasis added); LR 13 Ch D 434 at 453-4 (CA); aff’d (1882), LR 7 AC 219; 51 LJ Ch 797 (HL) (yarn). 112. Id. at p. 69 LT, p. 457 Ch D. 113. 42 Ch D 128, 137-39. 114. Text supra note 108.

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was done before would not be called upon to prove the fraud in order to get an injunction. Why? Because he says after the matter had been made clear to the defendant and the injury he had been doing, not by taking his own name but by taking another name, had been pointed out, then if he has persevered as he threatened to do after learning that what he was doing produced these effects, he would, unless in very exceptional cases, do a wrong.115

The distinction was effectively reiterated by Cotton, L.J., also in Turton, in the following passage:

No man must pass off his goods as the goods of another. Of course, that may be done unintentionally; but where there is a manifest and natural meaning in the words used that the goods are the goods of somebody else . . . he would be stopped from doing so as soon as he is aware of the facts which make the prima facie intention and result of what he is doing, passing off his goods as the goods of somebody else.116

Such passages remove the element of intention, or otherwise declare it to be imputed, solely for the remedy of having the activity “stopped.” They expressly do not remove intention from the issue of substantial monetary relief. It is hard to find a single judicial authority or legislative body having acknowledged this, and then nevertheless pronouncing that full damages or an accounting of profits are to be awarded despite innocence.

The recognition of the distinction by the Court, including Cotton L.J., in Turton is especially significant in that it effectively overruled the dictum of Cotton L.J. in Lever v. Goodwin where he had clearly overlooked the distinction and simply assumed it was well known that an accounting could be awarded despite innocence.117

The above overruling of the dictum in Lever v. Goodwin is also significant in that it undermines the reiteration of the dictum in such decisions as Saxlehner (1897).118 In particular, Kekewich J. in Saxlehner (1897) struggled with the issue of whether an accounting automatically follows the granting of an injunction, and held that it did, but only on the basis of being bound by the authority of Lever v. Goodwin. He did not recognize the distinction or the overruling.

Looking now at Cellular Clothing Co. v. Maxton (1889), as mentioned above, Lord Chancellor Halsbury endorsed the principle allegedly indicated in Millington; he quoted a lengthy passage

115. Supra note 113 at 138. 116. Supra note 113 at 141-2 (emphasis added). 117. Text supra note 20 citing p. 7 of 36 Ch D. 118. Text supra note 22.

Vol. 106 TMR 1057 from that decision, and introduced it as if “Lord Cottenham . . . goes out of his way to say very emphatically that [fraudulent intention] is not at all necessary in order to constitute a right to claim protection against the unlawful use of words or things . . . It is not necessary to establish fraudulent intention in order to claim the intervention of the court.”119 However, the references to intention in Maxton (and Millington) were for the purposes of obtaining “protection” and the “intervention” of the Court; Lord Halsbury (as with Lord Cottenham in Millington) did not expressly indicate intention was irrelevant for the purposes of monetary relief. On the contrary, Lord Halsbury strongly agreed “with almost every word”120 of the judgment of the trial judge, who explained that, while it was not necessary to prove fraud, and that while there is a “legal wrong” if the marks are confusing, nevertheless: “innocence of the act, may, of course affect the question of remedy.”121 Accordingly, even Maxton is not strong support for the principle that significant monetary relief can be easily awarded against the innocent defendant. On the contrary, as per the approval of the trial judge’s comment, Maxton may actually support the continued relevance of innocence for the purposes of deciding whether to award damages or profits.

It has been suggested that a statement of Lopes L.J. at the court of appeal level of Reddaway v. Banham (1892) supports the existence of two separate causes of action for passing off, one at law (requiring intention), and the other in equity (supposedly not requiring intention).122 The passage in question is where his Lordship commented:

The law applicable to this case may be stated as follows: [1] If a person sells his goods with the intention of deceiving purchasers, of inducing them to believe his goods are the goods of another, this is actionable, and entitles the latter to recover nominal damages, even though no special damage is proved. [2] If an article has acquired a distinctive meaning in the trade, connecting it with a particular person’s manufacture, and another so advertises, or describes, or makes up his goods as to lead purchasers to believe, or to create a probability of their believing, that they are buying the goods of the former, when in fact they are buying the goods of the latter (and this

119. Supra note 21 (emphasis added). (And recall that the passage in Maxton is important as it was in turn cited, for example, in Consumers Distributing Co. v. Seiko (1984) [text above at note 42], Boston Rubber Shoe (1902) [above note 25 at 329-30] and in the 1903 Coffin article [supra note 23 at 279]. 120. Supra note 21 at 322. 121. (1888), 5 SLT 367 at 369 (emphasis added). 122. See, e.g., see Best article, supra note 27, at 212-213, and see 202-203.

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though there is no intention to deceive, and no special damage proved), a court of equity will grant relief by way of injunction. The fraudulent intention is essential in the first case; it is unnecessary in the second.123

However, in reviewing the overall passage, it appears that insufficient attention has been drawn to the fact that his Lordship described the action at law as being a case where the plaintiff is entitled to seek “damages” (meaning, a form of monetary relief) whereas the claim in equity was described as a case for relief “by way of injunction.” So, when indicating that fraudulent intention was “unnecessary” in equity, Lopes L.J. was discussing that it was unnecessary for the purposes of injunctive relief; he was not discussing the ability of the court in equity to grant monetary relief. Accordingly, he did not actually contradict the distinction between intention not being necessary for an injunction and it being necessary for monetary relief and did not enunciate the principle that fraudulent intention was “unnecessary” in respect of deciding whether to award monetary relief.

To explain this even further, some have seen the two causes of action — the one at law and the other in equity — as being inconsistent in that one has required fraudulent intention and that the other seemingly has not. With respect, there has been no inconsistency; as mentioned above, at least during the relevant years in the 1800s, the cause of action at law could not be for an injunction, and was thus focused on monetary relief (in the form of damages), and thus intention was expressly maintained as an element; meanwhile, injunctive relief was sought pursuant to the cause in equity, in which case intention was imputed as of trial and thereafter. The difference between the two claims was not based so much on the type of court, but the type of remedy, one addressing past activities and the other addressing those in the future.

In a similar vein, L.J. Lindley therein stated: “To obtain an injunction in a case like the present it is not necessary to prove an intention to mislead.”124 This has been cited in such cases as Bow City Delivery Ltd. v. Independent Car Co. Ltd. (1972)125 as if the court should “not be concerned with fraudulent intention” even in a case for damages. However, as explained above, L.J. Lopes did not go that far, and the same can be stated regarding L.J. Lindley. The very excerpt from L.J. Lindley clearly states that intention is not necessary “[t]o obtain an injunction in a case like the present”; this is entirely consistent with the distinction between injunctive 123. 9 RPC 503 at 508 (emphasis added), [1892] QB 639, 67 LT Rep NS 301; appealed [1896] AC 199 (camel hair belting, former employee). 124. Id. at p. 507 (of RPC), p. 644 (of QB) (emphasis added). 125. 10 CPR (2d) 51, 55 (Canada–Alta SC TD).

Vol. 106 TMR 1059 and monetary relief. In addition, this passage in Reddaway clarified this even further, citing Millington as a case for an injunction, and also citing Johnston v. Orr Ewing (1882) where the distinction was enunciated.126 The distinction was echoed by A. L. Smith L.J. in Reddaway.127

In Boston Rubber Shoe (1902), Davies J. did not mention the distinction between injunctive and monetary relief when discussing intention. While Davies J. relied heavily upon Maxton, he did not recognize the subtleties of Maxton or of other cases. Thus, his suggestion that it is unnecessary to find ‘fraud or fraudulent intention’ on the defendant,128 at least as far as monetary relief is concerned, is unsound.129

U.S. Justice Oliver Wendell Holmes understood the distinction. In Straus v. Notaseme Co. (1916)130 the eminent Justice was dealing with a case for “unfair competition” (passing off) and he indicated that the permanent injunction would be maintained as it was “unfair to continue the use of a label so similar . . . But it does not follow that the defendants are chargeable with profits as a matter of course.” Accordingly, the order for profits was reversed because intention was not established.

As to Spalding v. Gamage (1915), a broader extract from the passage partially reproduced above131 reads:

Nor need the representation be fraudulently made. It is enough that it has in fact been made, whether fraudulently or otherwise, and that damages may probably ensue, though the complete innocence of the party making it may be a reason for limiting the account of profits to the period subsequent to the date at which he becomes aware of the true facts.132

In other words, the Court understood the distinction between innocence being irrelevant or imputed for the purposes of an injunction and it being relevant for monetary relief, and this is confirmed by the fact that the Court cited Edelsten v. Edelsten (1863)133 which expressed the distinction clearly.134 This appears to

126. Text at notes 111-112. 127. Supra note 123 at p 509-510 (of RPC). 128. Text above at note 25. 129. The impugned dicta in Boston Rubber Shoe can also be distinguished on the basis that it was not a case where the defendant was actually acting in good faith, as mentioned below in Mix-up #3. 130. 240 U.S. 179, 183 (U.S. Sup. Ct.) (emphasis added). 131. Text above at note 28. 132. Supra note 28 (emphasis added). 133. Supra note 18. 134. Text above at note 29.

1060 Vol. 106 TMR have been overlooked in a number of cases135 relying upon Spalding v. Gamage as if innocence was irrelevant for the purposes of monetary relief.

Still further, the other excerpt of Lord Parker136 from Spalding v. Gamage indicated that the successful plaintiffs are “prima facie” entitled both to an injunction and to an inquiry. The dictum did not foreclose the relevance of good faith. The same can be stated of the dictum of Lord Parmoor when he stated: “A plaintiff who establishes a case of this character is entitled to an injunction and, if necessary, to an inquiry into damages.”137 There was no statement that innocence was fully irrelevant for the purposes of damages or profits, let alone any attempt to support such a notion with any authorities.

In the Supreme Court of Canada in Hurlbut Co. v. Hurlburt Shoe Co. (1925), the decision of Sir Lyman Duff J. contains a lengthy sentence which states: “[N]o man is entitled by the use of his own name or in any other way to pass off his goods as the goods of another . . . even, without the conscious intention of doing so . . . .” But the sentence continues: “and if, when he becomes aware of the fact that such is the effect of his conduct, he persists in that conduct . . . he cannot be said to be using his own name in good faith . . . .”138 In other words, consistent with many of these cases, the infringing conduct is no longer in good faith after the defendant conclusively becomes aware that such conduct is infringing. This indication in Hurlbut effectively overruled any prior indications to the contrary, at least within Canada.

As to Draper v. Trist (1939), all three justices qualified their comments as constituting dicta; the question (as to whether fraud was a necessary element for damages) was unnecessary for that case.139 In addition, both Clauson L.J. and Goddard L.J., as he then was, clearly stated the question was a matter of great difficulty. For example, Goddard L.J. stated there was “a doubt — and a very considerable doubt — as to whether it is the law that damages can be obtained for innocent passing-off.” At most, he went so far as to say that, in such a case, it “may be . . . the plaintiff’s claim would be limited to nominal damages.”140 One can take this to mean that the common law requirement of intention 135. E.g., Henry Heath Ld. v. Frederick Gorringe Ld. (1924), 41 RPC 457 (Ch., Eve J) (sale of hats). 136. Text at supra note 29. 137. Supra note 28 at 289 of RPC (emphasis added). 138. [1925] SCR 141, 142-3 (emphasis added) (per Sir Lyman Duff J., who later became CJ; he was also, at the time, a member of the Judicial Committee of the Privy Council, although not sitting as such in this case). 139. In particular, as a consent order had been entered for an inquiry as to damages, and it also appeared that the defendants’ actions were willful in any event. 140. Supra note 31 at 528 (of All ER) (emphasis added); 443-4 (of RPC).

Vol. 106 TMR 1061 was breached on the theory that, previously, no damages could be awarded without intention. On the other hand, it can be taken to mean that only a small amount of monetary relief can be awarded, something of much less concern, and perhaps something simply as a compromise. In either case, such dictum was weak support for the notion that good faith is irrelevant, given that the distinction was not squarely addressed.

As a related matter, just before Greene M.R. expressed the dictum above,141 he quoted Lord Parker’s dictum in Spalding v. Gamage that “[n]or need the representation be fraudulently made.”142 But Greene M.R. stopped there and did not reproduce Lord Parker’s subsequent sentence referring to the long-standing distinction.143 Again, it seems that none of the Justices in the case understood that all of the earlier indications as to obtaining “relief” in equity regardless of innocence focused on injunctive relief addressing future conduct, and that any innocence of such conduct is lost as soon as the wrongfulness of that conduct is determined at the hearing.

As to Saville Perfumery (1941), it contains no discussion as to any of the above jurisprudence, especially as to the distinction.

In Wilts United Dairies, Ld. v. Thomas Robinson Sons & Coy., LD. (1957-58), the trial judge, Stable J., commented that “whether or not an innocent misrepresentation can be the subject of a claim for damages . . . appears to be at the moment undecided.”144 The appeal was then heard by a panel that included Lord Chief Justice Goddard, and he neither confirmed nor refuted the comment of the trial judge.145 This strongly indicates that the issue was still undecided, and again the distinction was not recognized or otherwise addressed.

Baume v. Moore (1958) is another case where the distinction is not recognized. Romer J., speaking for the Court, stated, for example, that “the defence of innocent and honest user of the manufacture’s name on the watches which the defendants have sold will not avail them as a defence . . . .”146 Romer J. relied upon the comments of Buckley L.J. in Brinsmead v. Brinsmead (1913)147 as if that case supported substantial monetary relief despite good faith. But Romer J. did not recognize that Brinsmead was a case where good faith was dismissed as irrelevant merely for the 141. Text at supra note 31. 142. Text at supra note 28 (emphasis added). 143. Text at supra notes 131–137. 144. [1957] RPC 220 at 229 (QB), decision aff’d, [1958] RPC 94 (CA). 145. [1958] RPC 94 (CA). 146. Baume and Co Ltd v. A H Moore Ltd, [1958] All ER 113, 116-117 (emphasis added); [1958] Ch 907, 917; [1958] RPC 226, 229 (CA) (infringement). 147. 30 RPC 489 (pianos).

1062 Vol. 106 TMR purposes of injunctive relief. Romer J. also overlooked the significance of the comment by Vaughan Williams L.J. in Brinsmead that a defendant may “be liable” for monetary relief if the defendant continues the deceptive representations after the defendant becomes aware that they are deceptive. In any event, the notion in these cases that good faith is irrelevant has been approved in other Canadian and U.K. cases as if the notion were sound.148

Arguably, the distinction was recognized, and properly applied, in La Touraine Coffee Co., Inc. v. Lorraine Coffee Co., Inc. (1946) where the U.S. Second Circuit Court of Appeals held that good faith use without knowledge does not preclude the issuance of an injunction.149

The decision in Seiko contained an extract from a text on the law of torts (Prosser)150 that expressly included similar qualifications as follows:

The older rule was that there must be proof of a fraudulent intent, or conscious deception, before there could be any liability, and this is still occasionally repeated; but the whole trend of the later cases is to hold that it is enough, at least for purposes of injunctive relief, that the defendant’s conduct results in a false representation, which is likely to cause confusion or deception, even though he has no such intention. 151

The idea of ignoring fraudulent intent was therefore just a “trend” and, in any case, this trend did not necessarily apply to any relief other than “for purposes of injunctive relief.” Accordingly, such authority did not conclusively discount good faith intent for the purposes of damages or profits.

The three decisions cited in Seiko (Millington v. Fox (1838), Perry v. Truefitt (1842), and Cellular Clothing Co. v. Maxton (1889)) are discussed above. In particular, the plaintiffs in some of these cases, including Seiko, sought only injunctive relief. Hence, the comments as to the relevance of intention did not necessarily go so far as to discount it for the purposes of whether to award damages or profits.

148. Id. at p. 506, lines 23-43. This notion in both Baume and Brinsmead was approved by Lord Guest in Parker Knoll, although Parker Knoll was a case merely for injunctive relief (as mentioned herein, infra note 187) and thus the notion was approved in respect of injunctive relief. The notion in Baume was also approved in Johnsons Ltd. v. Luscombe (1980), 54 CPR (2d) 80 (Canada–Nfld SC TD) John Mahoney J, as he then was, both for statutory passing off and passing off at common law, although this was another case merely for injunctive relief. 149. 157 F.2d 115, 118, 119, 70 U.S.P.Q. 429, 432-433 (2d Cir 1946). 150. Prosser, The Law of Torts (4th ed) (1978) at pp. 957-58. 151. Supra note 42 at 599 (emphasis added).

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As to Hébert & Fils c. Desautels (1971), even though damages were awarded in addition to an injunction, the damages were only in the amount of $100.152 Thus, the case can be distinguished as one of many cases that appears to express the principle that defendant’s good faith will not prevent an award of monetary relief but in the end does not actually award substantial monetary relief as against an innocent infringer. One can also question whether the principle is actually expressed in the case. It is true that Lajoie J.A. held: “A mon avis, sa bonne foi cessait dès le moment où il réalisait ou devait réaliser le grand danger de confusion entre les deux marques.”153 [“In my opinion, his good faith ceased as soon as he realized or ought to realize the great danger of confusion between the two marks.”] This dictum seems to include as an alternative the objective standard of whether the defendant “ought to realize” the danger of confusion as between the two marks, as if good faith was irrelevant. But the dictum also refers to good faith “ceasing” at that point, rather than being irrelevant from the start. If Lajoie J.A. truly intended to say that good faith was irrelevant to the awarding of substantial monetary relief, surely he would have said so, or at least not bothered with the concept of good faith “ceasing” upon actually realizing the danger of confusion. In addition, the phrase “ought to realize,” in context, could have been intended to be the equivalent of a defendant acting recklessly or with willful blindness (rather than negligently). It is commonly known in other fields of law that acting recklessly or with willful blindness is the equivalent of wrongful intention, rather than of mere negligence.154 Still further, Lajoie J.A. did not discuss the subtleties of the earlier jurisprudence. Accordingly, Lajoie J.A.’s use of the phrase “ought to realize” does not necessarily mean he was stating that good faith is irrelevant to the awarding of substantial monetary relief, let alone stating it soundly.

Similarly, Hyde J.A. in Desautels stated: “I agree with my colleague Mr. Justice Lajoie that regardless of Appellant’s intention [meaning, his original intention or motive] it must have [eventually] been clear to him that the design mark in question would lead to confusion . . . .”155 Hence, Hyde J.A. was looking at whether the good faith ceased (rather than being completely irrelevant), and whether the confusion among purchasers was clear to the defendant; this can be seen as another reference to the state of mind of the defendant (for the purposes of monetary relief)

152. As indicated in the report of the trial decision at 62 CPR 85. 153. Supra note 37 at 289b (emphasis added). 154. E.g., R v. City of Sault Ste Marie, [1978] 2 SCR 1299, at 1309 (Canada); Derry v. Peek (1889) LR 14 AC 337, 58 LJ Ch 864, [1889] All ER 1, esp. Bramwell L discussing a dictum of Cotton LJ. 155. Supra note 37 at 293 (emphasis added).

1064 Vol. 106 TMR rather than simply assessing whether confusion was clear to the court (putting itself in the position of the purchaser). This reading of Desautels is further supported by the fact that both the trial judge,156 and Lajoie J.A. cited the decision of Sir Duff in Hurlbut.157 Thus, overall Desautels hardly approved the ability to award significant damages in a case of good faith passing off.

Looking now at the comment of Lockhart J. in ConAgra v McCain Foods (1992),158 Gummow J.159 agreed that intention was irrelevant for the purposes of statutory passing off in Australia. However, this was without discussing whether the Legislature recognized the distinction. In addition, Gummow J. acknowledged the defense of good faith at common law. That is, among other references, he quoted the dictum of Lord Westbury in Edelsten v. Edelsten (1863)160 that a plaintiff is not entitled to any accounting or compensation in respect of activities before the defendant became aware of the material facts. Gummow J. then concluded that, in a passing-off suit at common law, “if the defendant embarked upon his activities fraudulently, these remedies run from that time.”161

Looking again at the ruling in Gillette v. Edenwest (1994),162 dicta from earlier cases “point[ed] the way” for Blackburne J. to conclude that dishonesty need not be established to obtain significant monetary relief. However, Blackburne J. too did not recognize or address the distinction between intention not being necessary for an injunction and it being necessary for monetary relief. He acknowledged earlier decisions in cases of innocent infringement or passing off that granted injunctive relief while denying monetary relief, but apparently did not appreciate the rationale for that difference.

Remo Imports (2007)163 is yet another case that did not award damages in respect of innocent infringement or passing off. This was a situation where both parties held registrations and sued each other. The registration of the losing party was canceled at trial but, up to that point, given that the registration had not been obtained fraudulently, the registration had provided that party with a statutory right to use the mark.164 Use of the registered

156. 62 CPR 85, 91. 157. Text at supra note 138. 158. Text at supra note 48. 159. As he then was. 160. Text at supra note 88. 161. Supra note 48, at paras. 37-45. 162. Supra notes 49, 51, 52. 163. Cited and discussed at supra note 62. 164. As explained in the decision, Remo Imports, at supra note 62 at paras. 106-114.

Vol. 106 TMR 1065 mark up until the point of cancellation can thus be seen as effectively having been innocent conduct.

In summary, some authorities that indicate that good faith is irrelevant to an award of monetary relief have not recognized the distinction that good faith was deemed irrelevant in earlier cases solely for the purposes of relief in the form of a final injunction. Intention is inherently imputed in respect of future activities after confusion and any other necessary elements of the claim have been established at trial. In particular, if the marks are declared to be confusing at trial, a defendant cannot be acting innocently as to confusion thereafter. Meanwhile, such rationale for removing intention from consideration for injunctive relief does not support removing it in respect of monetary relief, which obviously addresses activities in the past rather than in the future.

In addition to the above mix-up, there are a number of other mix-ups as to why good faith seems to have been ignored inadvertently in relation to the assessment of damages. These other mix-ups are discussed in the following sections below.

Mix-up #2: Not Distinguishing the Cases That Are Merely for Injunctive Relief or Oppositions

Another mix-up is that many cases stating that good faith is irrelevant do not necessarily address the issue of substantial monetary relief but rather, as a matter of fact, address injunctive relief, minimal damages, or the cancellation or opposition to a trademark filing. This mix-up represents a further basis for distinguishing many of the cases cited in Part II above.

Most significantly, as discussed with respect to Mix-up #1 above, Millington v. Fox and Coffeen v. Brunton are cases that only address the issue of injunctive relief. The following are additional decisions that only address injunctive relief, minimal damages or mere cancellation/opposition proceedings.

In Perry v. Truefitt (1842), Lord Langdale M.R. indicated some support for the principle suggested in Millington that proof of intent is not required.165 However, Lord Langdale expressed concern regarding the principle, stating that he “was not aware that any previous case carried the principle to that extent.” In addition, he may have expressed such concern instinctively in view of the fact that, unlike the case in Millington, the plaintiff in Perry v. Truefitt was indeed seeking an actual accounting from an innocent defendant. Moreover, the accounting and even the injunction were not granted. In view of all this, Perry v. Truefitt is another case that does not support the principle that significant

165. 6 Beav. 66, at 68, 73; 49 ER 749, at p 750; Cox Am. TM Cases 644, 646, 648 (Eng CA) (Mexican Balm).

1066 Vol. 106 TMR monetary relief can be easily awarded where the defendant is innocent.

Looking at the decision in the BARBIE case and the Lexus Foods case cited therein, no monetary relief was awarded in either, as both of these cases are merely opposition proceedings to pending trademark applications. As with the granting of an injunction, the granting of a registration speaks to future activities, and thus the intention to cause confusion going forward is imputed upon a determination that the marks are confusing. Damages for past activities are not available in oppositions or cancellation proceedings which are contests, in the case of oppositions, as to whether a registration should be granted, and, in the case of cancellations, as to whether a registration should be maintained. In either case, the registration effectively gives the registrant the right to use a mark going forward, meaning it is the very inverse of an injunction against that party. In view of the distinction between claims for injunctive relief and claims for monetary relief, it is understandable to ignore the good faith of the applicant or registrant for the purposes of determining the merits of an opposition to an application or a proceeding seeking to cancel a registration (on grounds of confusion going forward), and also for determining the merits of an injunction. But these opposition and cancellation decisions indicating that good faith is irrelevant for such purposes should not be taken as having established that good faith is also irrelevant for the purposes of ordering anyone to pay substantial monetary relief to the senior user to address past activities.

This represents a further mix-up found in Bow City Delivery Ltd. v. Independent Car Co. Ltd. (1972). Among other things, the court quoted from Warren v. Excel Petroleum Ltd. (1933)166 to the effect that an order could be made whether the use by the junior user “be made fraudulently and with a deliberate intent to deceive or not.”167 However, the Excel Petroleum case was addressed to canceling a registration obtained by the junior user, and enjoining the junior user from continuing to use the confusing mark.

The judicial comments within Enterprise Rent-A-Car Co. v. Singer168 can also be distinguished in that the focus of the trial decision was not damages but whether there should be a permanent injunction (including destruction of some offending signage).169

166. [1933] Ex CR 131 (Can.). 167. Supra note 125 at 54-55. 168. Supra note 55 at 482. 169. This is because it was determined before the trial that damages would be assessed at a reference, which can be a problem in itself as discussed below in respect of Mix-up #5. In addition, there was no discussion of the distinction of the relevance of good faith for the

Vol. 106 TMR 1067

Other cases that (i) are merely for injunctive relief, (ii) are merely oppositions or cancellations, or (iii) do not actually award substantial monetary relief, include the following:

• Hogg v. Kirby (1803)170 • Snowden v. Noah (1825 N.Y.)171 • Croft v. Day (1843)172 • Taylor v. Carpenter (1844 Mass.)173 • Coffeen v. Brunton (1849)174 together with all the cases

cited therein175 • Welch v. Knott (1857)176 • Dale v. Smithson (1861)177 • McAndrew v. Bassett (1863)178 • Amoskeag Mfg. Co. v. Garner (1869-1876)179 • Wotherspoon v. Currie (1872)180 • Siegert v. Findlater (1876)181 • Metzler v. Wood (1878)182 • Eastman Kodak Co v. Kodak Cycle Co (1898)183 • Robert Crean (1930)184 • La Touraine Coffee v. Lorraine Coffee (1946)185

purposes of monetary rather than injunctive relief. Moreover, the defendant’s actions were apparently not in good faith, as discussed further at infra note 244. 170. 8 Ves Jr 215. 171. Hopkins Ch. R. 347 (N.Y.); Cox Am. TM Cases 1 per Ch. Sandford (newspaper). 172. 7 Beav. 84, 49 ER 994 (Ch.) (blacking). 173. Taylor v. Carpenter (Oct. 1844) 3 Story 458; Cox Am. TM Cases 14 (Mass.) (injunction made perpetual). Effectively aff’d (motion for new trial refused) (Oct. 1846) 2 Wood. & M 1; Cox Am. TM Cases 32, 42-43 (Cir. Ct. Mass.). Damages were awarded as between the same parties by means of separate proceedings in New York, but even that decision is discussed below as hardly supporting such awards against innocent infringers, as discussed on a separate basis in text at infra note 197. 174. Supra note 12. 175. Knott v. Morgan (1836) (“The London Conveyance Company”), Gout v. Aleploglu (1833) (watches), Millington v. Fox (1838), supra note 8, and Bell v. Locke (1840). 176. Supra note 15. (In addition, the injunctive relief was denied.) 177. Supra note 16. 178. 4 De Gex J & Sm 380; 10 Jur (NS) 492, [1864] 33 LJ Ch 561 (contains the decisions of both V-C Wood Mar. 4, 1863, and LC Westbury May 7, 1863). 179. Various reported decisions but the overall proceedings were merely for an injunction. 180. LR 5 E & Ir App 508, 518b, 523t; 27 LT (NS) 303 (HL) (Glenfield Starch). 181. 38 LT Rep (NS) 349, LR 7 Ch D 801, 26 Wky Rep 459 (Angostura Bitters). 182. Infra note 220. 183. 15 RPC 105 (proceedings were for both an expungement and an injunction). 184. Supra note 30.

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• Sund v. Beachcombers Restaurant (1960)186 • Parker-Knoll v. Knoll International (1962)187 • Noshery v. Penthouse Motor Inn (1969)188 • Johnsons Ltd. v. Luscombe (1980)189 • Consumers Distributing v. Seiko (1984)190 (at the appellate

level) • Reckitt & Colman v. Borden (1990)191 • Walt Disney Productions v. Triple Five Corp. (1992)192 • Kirkbi (2005)193

Mix-up #3: Not Distinguishing the Cases Where the Defendant Was Not Necessarily Innocent

In many of the cases cited in Part II, the court actually found or otherwise strongly implied that the defendants acted in bad faith. Accordingly, for this reason alone, the judicial comments in those cases stating that good faith is irrelevant can be considered as dicta194 or otherwise less persuasive. Again, these are not cases where the court actually awarded substantial damages as against an innocent defendant. This aspect of these cases sometimes requires a careful reading of the decisions. These cases are thus discussed individually below, again substantially in chronological order.

In Blofeld v. Payne (1833), intention was clear from the facts.195 This reading is confirmed by the description of those facts during the oral argument in Crawshay (1842) namely, that “it was proved [in Blofeld] that the defendants had obtained some of the plaintiff’s own wrappers, and had wrapped their hones in them; so

185. Supra note 149, 157 F.2d 115, at 118-119 (F.2d). 186. Supra note 32 at 231 (which was cited in Noshery, id.). 187. Supra note 35. 188. Supra note 33 at p. 61, awarding only $1. 189. Supra note 148. 190. Supra note 42. 191. Supra note 45. 192. 130 AR 321 (QB), Dea J (Alta TD). 193. Supra note 56 at para. 7. These proceedings technically included a claim for damages, but such relief was not ultimately granted. (In addition, there was no discussion as to why such relief should be granted in cases of good faith.) 194. Here, “dicta” is used as short for “obiter dicta,” meaning the Court’s incidental or superfluous comments that are not in themselves binding. 195. 4 Barn & Adol 410; 1 Nev & MKB 353; 2 LJKB 68; 110 ER 509; Cox Am. TM Cases 635 (Court of King’s Bench) (wrapping of metallic hones for sharpening razors etc.).

Vol. 106 TMR 1069 that a fraudulent intention was also established in that case beyond all question.”196

Taylor v. Carpenter (Dec. 1844, New York) was an early U.S. case where, in addition to an injunction, an inquiry as to damages was granted. However, it was a case where the defendant acted intentionally. For example, the Chancellor notes: “the defendant admits that he has intentionally pirated the complainants’ name as well as their other marks . . . . After such an avowal, no one can doubt for a moment that he did it for the fraudulent purpose . . . .”197

The decision in Coats v. Holbrook (1845) has already been discussed above (in Mix-up #1) although it can also be included here. V-C Sandford flatly stated the defendants acted in bad faith. They “knew” that someone other than the plaintiff made the goods, and that the sale of such article was spurious. The defendants were “swindling” purchasers. The circumstances were such that “it was not supposable that the defendants were ignorant of the wrong.”198

In Rodgers v. Nowill (1846-47), the defendants’ conduct was also intentional. In particular, within the proceedings at law, Maule J. describes the goods as “spurious.”199

In Patridge v. Menck (1848), the element of intention was not necessarily eliminated as the Chancellor on the first appeal referred to the civil wrong as “piracy.”200

In Davis v. Kendall (1850),201 it is not at all clear from the decision whether the defendant acted innocently.

196. Supra note 68 at 366 (of Manning & Granger), p. 150 (of ER). 197. 19 Paige 292, 298; Cox Am. TM Cases 45, 53-55 (N.Y. Ch.) (sewing thread); aff’d (Dec. 1846) Cox Am. TM Cases 45, 55-67. (The admission may seem surprising, but the defendant instead raised various other defenses, such as whether foreign plaintiffs were entitled to protect their marks in the defendant’s jurisdiction.) 198. Supra note 11 at p. 30-32 of Cox Am. TM Cases. The case report at p. 22 also explains that the defendants copied the plaintiff’s name, figures, color, and general appearance. 199. (1947), 136 ER 816, 823, 5 CB 109, 127 (pocket knives). Similarly, in Chancery, Wigram V-C explained that the defendants effectively sought someone having the same surname as the plaintiffs so that the defendants could have an excuse for having the same trade name (“Rodgers & Sons”). It was also explained that any customer ordering cutlery under such mark obviously had in mind the plaintiffs’ cutlery rather than the defendants’, presumably because the names and goods were so similar, and the plaintiffs name was so well known. It also seems that the defendants mindfully elected not to take the advice of Wigram V-C (which was given to the defendants within that ruling) to take certain steps to distinguish the defendants’ mark going forward, such as by clarifying their place of business or name by inserting the appropriate first name “John” in front of “Rodgers & Sons.” (1946), 6 Hare (Ch) 325, 333, 334. 200. Cox Am. TM Cases 72, 77 (N.Y.). 201. Supra note 14. This decision cited Coats v. Holbrook and Taylor v. Carpenter which, as discussed herein, when properly read, do not properly support the notion that good faith is irrelevant.

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Dixon v. Fawcus (1861)202 has been cited203 as indicating that an accounting, in addition to an injunction, can be obtained against an innocent infringer. But this case presented an unusual situation. It effectively involved three parties. The first party already successfully sued Dixon for having manufactured infringing goods bearing the name of the first party. So, in Dixon v. Fawcus, it was Dixon now suing the third party for having induced Dixon to have manufactured those infringing goods, and Dixon succeeded in recovering from Fawcus the monies Dixon was ordered to pay to the first party in the first case. Even though the court referred to Millington, Dixon v. Fawcus was a case absolving the more innocent of the two infringers. It also seems likely that such inducer, Fawcus, did not act innocently in having instructed Dixon to manufacture the goods bearing the name of the well-known trademark owner. In addition, there was no discussion within the decision as to the distinction (that innocence might be relevant as to damages even though it might be irrelevant as to a permanent injunction). Thus, the case is not very strong support for the principle that innocence should be irrelevant as to damages.

In Edelsten v. Edelsten (1863), Lord Westbury affirmed the order below that included an accounting of profits. But, in view of his Lordship’s comments mentioned above that a plaintiff is not entitled to any accounting or compensation in respect of activities before the defendant became aware of the material facts,204 it is clear his Lordship must have felt that such awareness was established in that case. In addition, Lord Westbury’s decision includes an actual examination of “the intentional imitation” of the plaintiff’s mark, and finds that such mark was “well known to the defendants” and that the defendants affixed the plaintiff’s Crown and Anchor mark for the very purpose of “hav[ing] the benefit of the reputation which that mark had already acquired.”205 Still further, Lord Westbury commented that “the essential part of the plaintiff’s trade-mark . . . has been deliberately taken by the defendants . . . .”206 He even described such conduct as “a piracy” of the plaintiff’s mark.207 Thus, for this further reason, this was not a case properly supporting the notion that significant damages or profits can necessarily be obtained for good faith infringement.

202. 30 Law J (QB) 137; 3 El & El 537. 203. For example, in Coddington, Digest of the Law of Trademarks (1878) (N.Y. Ward & Peloubet) at § 459 on p. 152. 204. Text at supra note 88. 205. Supra note 18 (De Gex J & Sm) at 201-202. 206. Supra note 18 (De Gex J & Sm) at 202. 207. Supra note 18 (De Gex J & Sm) at 203 (emphasis added).

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In Wotherspoon v. Currie (1872), Lord Westbury stated that the case at hand “comes within the principle on which the jurisdiction is founded—the principle being to prevent a party from fraudulently availing himself of the trade-mark of another.”208 This means that his Lordship held both that fraudulent intention was necessary and that the defendant in that case came within that principle. Similar comments are found elsewhere among the different opinions of the Lords in that case, namely: it was “clear and manifest” that the confusion was intentional;209 “mala mens” was established toward the secondary purchaser;210 the defendant’s explanation was “false”;211 and the defendant’s mark was a “contrivance” “done malo animo.”212 Alike, at first instance, Malin V-C concluded “I am satisfied that this was a deliberate and fraudulent intention.”213

Derringer v. Plate (1865)214 was later distinguished by the U.S. Supreme Court as a case where “it is implicit in the report that plaintiff’s pistols were on the market in San Francisco, and his trademark known there and imitated by defendant for that very reason. It was such a mark as could not be accidentally hit upon.”215 So, the mark DERRINGER was imitated intentionally, given that it was well known, and the mark was inherently distinctive for pistols. This was not a case of good faith infringement.

In Ford v. Foster (1872), an accounting was ordered but, once again, it is clearly indicated in the decision that this was not a case “where the defendant was a totally innocent person.”216 In addition, rather than award an accounting for the full preceding six years, the accounting was limited to the period since the filing of the claim.217 This conforms to the notion that the filing and serving of a claim sometimes sufficiently makes it clear that the marks are confusing (and that the plaintiff has priority and a basis for a claim) such that any continuation by the defendant is rarely in good faith. 208. Supra note 180 at 522 (emphasis added). 209. Supra note 180 at 516-517. 210. Supra note 180 at 517-518. 211. Supra note 180 at 520. 212. Supra note 180 at 522. 213. (Apr. 1870), 22 LT Rep (NS) 260 at 262. The V-C asked the very question (at p. 261): “Has there been an intention to mislead or not?” 214. 29 Cal. 292 (CA) (1865). 215. Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 418 (1916) (emphasis added). Coincidently, consistent with the theme of this work, the court in Derringer also mentioned that, where the remedy of an injunction is awarded, pecuniary compensation “might” be awarded. Id. at 298. 216. [1871-1872] LR 7 Ch App 611 at 630 per Mellish J (involving The Eureka Shirt). 217. Id. at 633-34.

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In Siegert v. Findlater (1876), the public deception again seems to have been considered to be intentional. For example, it was mentioned that the deceptive name was adopted as part of a “scheme of fraud of which I have found him guilty.”218

In Manufacturing Company v. Trainer (1879), despite Field J. having stated: “Proof of an intention to defraud is not required,” he then added “but it is plain that the respondents acted with a design.”219

Canada Publishing Co. v. Gage (1885) involved a claim for monetary relief. But it was not a case where the defendant was found to be innocent (nor did the decision actually discuss any rationale for not requiring intention). The only case cited was Metzler v. Wood (1878), which did not suggest that intention is not a requirement for monetary relief. On the contrary, both the trial judge and court of appeal in Metzler posed the question as to whether the defendant “dishonestly” passed off his work, suggesting that the issue of dishonesty was relevant, and indicated that such intention was established.220 Moreover, Metzler v. Wood only involved injunctive relief.221

Lever v. Goodwin (1887) is another case where it was effectively found that the defendant was not, in fact, innocent; Chitty J. in the court below explained that, in making the infringing product and supplying it to the middlemen (retail dealers), the defendant put “an instrument of fraud into their hands”222 and that the defendant did so “knowingly.”

In Eastman Kodak Co v. Kodak Cycle Co. (1898), the likelihood of confusion was effectively described as intentional; that is, the defendant’s usage was described by the court as being “for the purpose of connecting themselves in some way with the Plaintiff Company and its business,” and that that was “their real and sole object.”223

As to Boston Rubber Shoe (1902), Davies J.’s suggestion that fraudulent intention was likely irrelevant can be treated as dicta given that it was preceded by his strong suggestion that fraudulent intention was present in that case.224 Once again, it is not actually a case where the court found it just to award significant monetary relief as against a defendant having acted in good faith.

218. Supra note 181 at 354 (of 38 LT Rep (NS)). 219. 101 U.S. 51, 67 (another Amoskeag linen case). 220. 8 Ch D 606 at 608b, 610m, 611b, 613b, 615b. (“b” meaning bottom of the page, and “m” meaning the middle) The case is also reported at CA 38 LT Rep 541. 221. Text above at note 182. 222. Supra note 20 at p. 3 of 36 Ch D. 223. 15 RPC 105, 111 (emphasis added). 224. Supra note 25 at 326-7.

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In Spalding v. Gamage (1915), Lord Parker stated: “I find it difficult to imagine that the advertisements were not deliberately framed so as to convey” the false character of the goods.225

In Hurlbut (1925), Sir Duff J. took the time to indicate, twice, that it would be “difficult” to reverse the trial judge’s acquittal of the defendant on the charge of dishonesty or deliberateness.226

The general reading of Draper v. Trist (1939) suggests that the court was not at all impressed with the faithfulness of the defendant.227

In La Touraine Coffee v. Lorraine Coffee (1946), the defendant’s claim to innocence was described as an instance of “stretching credulity beyond its breaking point.”228

In Young v. Holt (1947), the court held that the defendant would be acquitted of fraud “in the ordinary sense of the term” but it seems clear that the court considered that he nevertheless acted in bad faith; he was described as having a “closed state of mind throughout the whole of the relevant period” and as not being “in a state of complete innocence.”229

In Treasure Cot Co Ltd v. Hamley Bros (1950),230 there was no indication the defendant acted in good faith (nor was there any express rejection of the distinction as to the relevance of good faith for the purposes of monetary relief rather than injunctive relief).

Wilts United Dairies Ltd. v. Thomas Robinson Sons & Co. (1957–58) is another case in which monetary relief was awarded.231 However, there are indications the defendant acted in bad faith.232 True, at first instance the court found that the defendants did not act maliciously, in the sense of intending to harm the plaintiff;233 but it was also held that the defendants “did know” that the milk they were handling was old,234 and thus they effectively misrepresented such milk willfully.235

In Oertii v. Bowman (1957), it is true the court of appeal referred to the trademark right as a quasi-property right (implying

225. Supra note 28 at 152 of All ER. 226. Supra note 138 at 149, 150. 227. Supra note 31. 228. Supra note 149. 157 F.2d 115, 118 (2d Cir) (1946). 229. [1948] 65 RPC 25, 29-30 (Mendoza sherry). 230. 67 RPC 89 per Harman J (HC Ch) (baby cots). 231. Supra note 144 (QB decision) at 229. 232. Supra note 144 (QB decision) at 237. 233. Supra note 144 (QB decision) at 234. 234. Supra note 144 (QB decision) at 230; point reiterated on appeal, supra note 144 at 96, 98. 235. In addition, the decision can be further distinguished in that the legal principle seemingly was conceded by the defendants that “if in fact there is a passing off ignorance is irrelevant, that the defendants are liable”; supra note 144 (QB decision) at p. 228 ll 47-51.

1074 Vol. 106 TMR that good faith is of little or no relevance) but the headnote of the decision indicated that the passing off was held (at first instance) to be deliberate.236 And, again, there was no recognition of the distinction between the relevance of good faith for the purposes of monetary rather than injunctive relief.

In Sund v. Beachcombers Restaurant Ltd. (1960), the court stated that the defendant, Mr. Porter, “knowingly committed this deception” and that “[i]f he was not aware of the possibility of confusion before he started . . . he was so informed by the letter written on behalf of the plaintiffs before you open the doors.”237

In S. & S. Industries Inc. v. Rowell (1966), Spence J. stated that “[t]here was . . . evidence of malice.”238

As to Noshery v. Penthouse Motor Inn (1969), the decision indicates that the defendant was “amply warned previous to its formal opening” of the fact that the subject mark was used and registered by the plaintiff. In addition, the judge concluded “I am not at all satisfied as to the bona fides of the stated defendant.”239

An inquiry as to damages for passing off was ordered in John Walker & Sons Ltd v. Henry Ost & Co Ltd (1970), but it was held that the evidence showed “conclusively” that at least the first defendant “appreciated the deception” that would occur.240

It could also be stated that the trademark violation in Hébert & Fils c. Desautels (1971) was intentional as the logos bore some striking similarities; anyone comparing the logos and reviewing the other facts can see that the copying was not coincidental.241

Damages were ordered (for passing off) in Bow City Delivery Ltd. v. Independent Car Co. Ltd. (1972), but it was clearly indicated: “There is no doubt that . . . the defendant deliberately proceeded to carry on business under the same name, with an intention to usurp some of the business of the plaintiff.”242

Orkin Exterminating Co Inc v. Pestco of Canada Ltd (1985)243 contains various comments as to the defendant’s bad faith, such as that “it surely must be a relevant factor to take into account in adjusting competing interests.” Bad faith is also clear from the fact that the defendant copied the unusual name Orkin, and maintained a phone listing under that name without any

236. T. Oertii Ag v. E. J. Bowman (London) Ltd et al, [1957] RPC 388, 389 (CA); on appeal from [1956] RPC 282 (TD) (“Turmix” sales). 237. Supra note 32 at 229. 238. [1966] SCR 419, 433; 48 CPR 193. The case is discussed further below in text at note 262. 239. Supra note 33 at 220. 240. [1970] RPC 489, 501-501; [1970] 2 All ER 106. 241. The logos can be compared in the report of the trial decision at 62 CPR 85, 85-86. 242. Supra note 125 at 54. 243. 1985 CanLII 157 (ON CA), 5 CPR (3d) 433 (Ont CA).

Vol. 106 TMR 1075 advertising under that name, such that anyone finding the defendant’s phone listing did so on the basis of the advertising and reputation of the plaintiff.

As to Enterprise Rent-A-Car Co. v. Singer (1996), the Justice found the defendants’ explanation for choosing the offending name was “not credible” and that such actions were “at the very least suspect.”244 This was another case where the defendants’ actions were effectively indicated as being intentional.

Damages were ordered (for trademark infringement) in Source Media Group Corp. v. Black Press Group Ltd. (2014) and in cases cited therein, but the infringements were found to be willful.245

Clearly, all such decisions, and many others that might suggest intention is irrelevant, can be distinguished on the basis that the defendants were not innocent in those particular cases.

Mix-up #4: Not Distinguishing the Presumption That Confusion Causes Damage

It has often been stated that the element of damage is presumed in trademark cases: if the marks are confusing, then there is damage.246 But such presumption that confusion causes damage should not be mixed up with the issue of whether damages or profits should necessarily be awarded (and how much). The presumption that the use of a confusing mark causes damage should not be taken as a presumption that damages should be awarded, as the latter presumption implies that any other equitable issues are irrelevant.

Presuming that the element of damage is established (on the basis of public deception or confusion) is one thing, but going so far as to say that the entitlement to a full award of damages is also established on that same basis is quite another. The latter is an unmindful leap; it inadvertently and unsoundly bypasses the role of good faith and other equitable considerations, such as acquiescence and delay. It also inadvertently bypasses the role of the plaintiff’s own “unclean hands,” as in cases where the plaintiff has been making its own misrepresentations to the public. This mix-up even bypasses other issues such as ownership, validity, and priority.

The potential for a mix-up is especially high considering that the element of damage is often described by the term “damage” in the singular form, whereas the term “damages” refers to the actual monetary relief. Thus, dicta along the lines that “damage is

244. Supra note 55 at 482. 245. 2014 FC 1014. 246. For example, see text below at note 141.

1076 Vol. 106 TMR presumed” (especially for the purposes of injunctive relief) have been mistaken as an indication that “damages are presumed.”

An example of such mix-up is found in Regal Tow Ltd. v. Goodtime Toys Inc. (1974), a case of statutory passing off. Heald J. interpreted Noshery v. Penthouse Motor Inn (1969)247 as having established that “once the Court is satisfied that goodwill has been interfered with and that there has been passing off, then damages are presumed at law.”248

Within the trial judgment of Dea J. in Walt Disney Productions v. Triple Five Corp. (1992), the judge held: “Once elements (1) and (2) [as to Goodwill and Confusion] are shown, damage is presumed. The intention of the defendant is immaterial.”249 Again, this would be sound insofar as “damage” is presumed for injunctive relief but not necessarily for monetary relief.

Recall that Lord Parker in Spalding v. Gamage (1915) stated in dictum: “It is sufficient to say that the misrepresentation being established, and being in its nature calculated to produce damage, the plaintiffs are prima facie entitled both to an injunction and to an inquiry as to damage . . . .”250 However, this dictum merely states that the plaintiffs are “prima facie” entitled to such an inquiry.251

The mix-up may have actually occurred in the prominent decision of Draper v. Trist (1939). Therein,252 Goddard L.J. (and also Greene M.R.) referred to a passage in Rodgers v. Nowill (1847) “in which Maule J. showed that damage was imputed in that case.” In the same paragraph, Goddard L.J. also stated: “I think that Rodgers v. Nowill shows that, once one has established passing off [confusion], there is injury to goodwill, and this court or the jury must assess, by the best means they can, what is a fair and temperate sum to give to the plaintiff for that injury.”253 However, the excerpt does not necessarily establish that the quantum should be 100% of the damages or profits; the wording of the excerpt actually allows merely for awarding what is “a fair and temperate

247. Supra note 33. 248. 19 CPR (2d) 98 at 106 (Canada, FTD, per Heald J, as he then was) (emphasis added). The defendant’s actions were not described as fraudulent, and may have very well been innocent in that the previous owner of the mark was bankrupt, and the defendant did not know such rights had been sold to the plaintiff by the trustee; e.g., at p 102. 249. 130 AR 321 (QB), Dea J at p 329 para. [13] (emphasis added); discussed ambiguously on appeal at 1994 ABCA 120, 17 Alta LR (3d) 225; 53 CPR (3d) 129, paras. 84-86 (Alta CA). 250. Supra note 28 at 287 of RPC (emphasis added). 251. Text at supra notes 136–137. 252. Supra note 31 at p. 527 (of ER) (emphasis added). 253. Id. (emphasis added).

Vol. 106 TMR 1077 sum.” Thus, such excerpt on its own was not necessarily intended to exclude the relevance of good faith.

Secondly, any such suggestion by Maule J. in Rodgers v. Nowill has to be read in light of the fact that Maule J. understood the distinction (namely, that intention may be irrelevant or otherwise presumed for the purposes of a final injunction, but not for the purposes of damages).254

Thirdly, Rodgers v. Nowill is a case where the defendants’ conduct was actually intentional.255

Accordingly, it would be questionable to rely upon such decisions as Draper or Rodgers v. Nowill as holding that intention can be presumed or otherwise ignored for the purposes of awarding substantial monetary relief.

In summary, the presumption that the use of a confusing mark causes damage should not be taken as a presumption that damages should necessarily be awarded.

Mix-up #5: Not Distinguishing Between the Relevance of Intention as an Element of Liability

and as a Mere Factor as to Quantum The next type of mix-up is that intention can be “relevant” or

legally recognized in at least256 two respects: [1] it can constitute a necessary element as to liability,257 or [2] it can constitute a factor as to the quantum of monetary relief.258

These two roles can be mixed up both in legal analysis and in practice. In legal analysis, many of the dicta in Part II state that intention is irrelevant but they are unclear in terms of it being irrelevant as an element, as a factor or both. For example, it has been stated that passing off is founded upon the tort of deceit which requires intent to deceive and that this “requirement” for the purposes of passing off “died out in the mid-1800’s.”259 Even if this view is maintained despite the other mix-ups leading up to it,

254. Text at supra note 68, within Crawshay v. Thompson (1842), which decision was discussed in front of Maule J during Rodgers v. Nowill, as indicated at pp. 819-820, 820-21 (of ER at supra note 199). 255. Text at supra note 199. 256. Intention could also be relevant as a factor in assessing likelihood of confusion, and surely in respect of criminal liability, and punitive and exemplary damages although, again, this work focuses on its relevance in respect of substantial monetary relief in the form of damages or an accounting. 257. In which case it is better described as being “imputed” from the point of the trial (rather than “irrelevant”) for the purposes of injunctive and other and other forward-looking relief as discussed within Mix-up #1. 258. In which case, intention can properly be described as “irrelevant” or “unnecessary” to the issue of liability, albeit not irrelevant as to the issue of quantum. 259. Text at supra note 42.

1078 Vol. 106 TMR the point here is that removing intention as a requirement for liability should not be misread as removing it as a factor as to quantum.

A rare and isolated decision where the distinction was at least recognized in Canada is S. & S. Industries Inc. v. Rowell (1966). The decision dealt with statutory trade libel which, as with statutory passing off, is treated in the Canadian statute as another form of unfair competition.260 The very issue on appeal was whether there was a requirement that false or misleading (libelous) statements be made with knowledge of their falsity (or that they be made maliciously). The court ruled that it was not an element (at least not with respect to injunctive relief and pursuant to the statutory form) but that it is still relevant as a factor as to quantum. In particular, Martland J. for the majority of the court had said: “In my opinion, the natural meaning of s. 7(a)261 is to give a cause of action, in the specified circumstances, in respect of statements which are, in fact, false, and the presence or absence of malice would only have relevance in relation to the assessment of damages.”262

This distinction between these two possible roles of intention provides another basis to consider the comments in Enterprise Rent-A-Car Co. v. Singer (1996).263 It was a case where it was determined before trial that damages would be assessed separately at a “reference,” and thus the focus of the trial itself was whether there should be a permanent injunction. Accordingly, the judicial comments cited from this decision in Part II (to the effect that it is “not necessary” to prove bad faith, and that intention is “irrelevant”264) were either unreliable (on the basis of other mix-ups) or merely directed to the irrelevance of intention for the purposes of “liability.” The comments do not unequivocally deem intention irrelevant for the purposes of assessing the quantum.

In terms of Mix-up #5 occurring in practice, the mix-up can especially occur in cases where, as in Enterprise Rent-A-Car Co. v. Singer (1996), the quantum of monetary relief is bifurcated from the issue of liability; there is a trial as to liability and then a separate proceeding to assess the quantum of monetary relief. Intention might not be taken into account at the trial as to liability (again either on an erroneous view of the law in respect of issue [1] above, or on the assumption that it is only a factor as to the quantum of damages) but then overlooked at the assessment (either on a separate error of law in respect of issue [2], or on the 260. Namely, in s. 7 of the Canadian Trade-marks Act. 261. The subsection in issue regarding statutory trade libel. 262. Supra note 238 at SCR 429 (emphasis added). 263. Text at supra note 55. 264. Id.

Vol. 106 TMR 1079 erroneous assumption that intention has already been taken into account at the trial as to liability).

This also represents a further basis for questioning any indications in the important decision in Draper v. Trist (1939) that intention is irrelevant to damages.265 Prior to the decision on damages, a consent order was made for an inquiry as to damages.266

Again, in a bifurcated proceeding, good faith could easily be overlooked in assessing liability at the trial on the grounds that it is not an actual element as to liability. Such good faith could then easily be overlooked at the reference as to the quantum of monetary relief on the notion that any relevance of any such issue has already been considered at trial and that such reference should simply focus on mechanically assessing the defendant’s profits or the plaintiff’s lost profits.

The same concern also applies to other considerations such as acquiescence and delay; they too should not be overlooked due to bifurcation.

Mix-up #6: Not Distinguishing the Presumption of Intention Where the Likelihood of Confusion Is Strong

Another trademark principle is that intention can be presumed where the likelihood of confusion is strong.267 For example, if the plaintiff’s mark is unusual and is very well known, and the defendant has copied it in detail, and is using it for the same goods and in the same area, there is an obvious presumption or inference that the copying was intentional.

However, the presumption is evidentiary. Evidence of intent is hard to find. This presumption allows for such a finding without the need for the plaintiff to come forth with specific evidence of intent. But because the presumption is evidentiary, the mere existence of the presumption confirms the fact that intention is relevant; intention is something that arguably needs to be proven, whether directly or by such indirect means.

Being evidentiary, the presumption of intention in cases of strong likely confusion should not be treated as if intention is an automatic consequence as a matter of law in every case where confusion is established. It is merely a presumption in the sense that confusion is an indication or factor to be considered as to intention in combination with all the other circumstances of the particular case. This understanding is supported by the fact that a number of early cases, when properly read as discussed within this

265. Such indications are reproduced in the text above at note 31. 266. As mentioned supra note 139. 267. E.g., see text below at 270.

1080 Vol. 106 TMR work, had indicated that intention is relevant rather than irrelevant.268 Thus, a strong likelihood of confusion should certainly not be a presumption of intention in the sense that intention is a foregone conclusion as a matter of law.269 Looking at some dicta that could have easily been misconstrued in this manner, Lord Chelmsford in Wotherspoon v. Currie (1872) stated that “an intention to deceive” can be shown by the resemblance between the markings.270 But his Lordship meant that the resemblance was only a factor to consider in assessing intention. This is revealed by the fact that all three Lords discussed whether intention had been established as a matter of evidence.271

A few years later, such dictum in Wotherspoon was cited and paraphrased, correctly, by Clifford J. in McLean v. Fleming (1877). His paraphrasing could be misread if one focuses simply on his wording that reads: “[P]roof of fraudulent intent is not required . . . as the liability of the infringer arises from the fact that [the infringer] is enabled, through the unwarranted use of the trade-mark, to sell a simulated article as and for the one which is genuine.”272 A broader extract from this sentence reveals other wording to the effect that “Positive proof of fraudulent intent is not required where the proof of infringement is clear.”273 Such emphasized wording is obviously critical to a proper understanding of the phrase “fraudulent intent is not required.” It is simply that “Positive proof” thereof is “not required” in the sense that fraudulent intention can otherwise be proven indirectly (such as, by a presumption arising from a strong likelihood of confusion). In any case, it was understood that, for the purposes of monetary relief, fraudulent intention ought to be proven.

The fact that Clifford J. did not propose to undermine the relevance of intention is confirmed within another passage in McLean v. Fleming where he indicated that, where there is a “want of” fraudulent intent, relief of this kind — an “account of gains or profits” — “is constantly refused” and he cited several authorities,274 including Edelsten, and even Millington.

To further consider the possibility of a mix-up between these two principles, both Wotherspoon and McLean v. Fleming were then paraphrased shortly thereafter by Field J. in Manufacturing

268. Especially as discussed within Mix-up #1. 269. This is in direct contrast to the principle that intention can indeed be presumed automatically in every case for the purposes of enjoining any further infringement after confusion and liability have been pronounced at trial, as discussed within Mix-up #1. 270. Supra note 180 at 519. 271. Text above at notes 208-212. 272. 96 U.S. 245 at 253-54 (liver pills) (emphasis added). 273. Id. (emphasis added) 274. Id. at 258-59.

Vol. 106 TMR 1081 Company v. Trainer (1879).275 The paraphrasing was not ambiguous at first but, later in the decision, the principle was loosely simplified as merely that “[p]roof of an intention to defraud is not required.”276 Again, if not read in context, such latter comments in Trainer can be misunderstood as meaning that proof of intention to defraud is not required. Again, either intention was to be proven by positive proof, or by indirect proof (such as by a strong likelihood of confusion). It also helps to know that Clifford J. participated in the case and, while he dissented, he did so only on other grounds; his comments specifically regarding intention are consistent with Field J.’s comments for the majority, and with Clifford J.’s own comments in McLean v. Fleming.

Within his dissent in Manufacturing Company v. Trainer, Clifford J. cited a passage from Coats v Holbrook277 suggesting that intention is not relevant, but again any such simplified paraphrasing should not be taken out of context.278

Also within his dissent in Manufacturing Company v. Trainer, Clifford J. cited Filley v. Fassett (1869). It, too, contains a dictum worth discussing under this heading. Therein, Currier J.A., for the court, stated: “If the name as used by them is calculated to deceive, the intention to deceive is to be inferred therefrom.”279 This is another bald statement that needs to be read in context. Filley v. Fassett cited Fetridge v. Merchant (1857)280 in respect of that principle, and Fetridge in turn had quoted such a dictum from Crawshay v. Thompson (1842), particularly where Maule J. stated: “If the [device or logo] is calculated to mislead, the intention to deceive would be manifest.”281 As submitted earlier, the suggestion that intention is presumed or “manifest” actually confirms that intention is relevant.

In addition, Maule J. understood that intention was irrelevant (or otherwise presumed) for the purposes of a final injunction rather than for damages.282 Still further, the quoting of such dictum within Fetridge was mere dicta, as Fetridge was yet another case focused on injunctive relief rather than monetary relief, and the injunction (which previously was granted) was

275. Supra note 219 at 66, 64. 276. Supra note 219 at 67 (Clifford J. dissenting). 277. Supra note 11 at 626 (of Sand. Ch. R). 278. Even the passage in Coats can be discounted on two grounds as discussed in Mix-ups #1 and #3. 279. Supra note 13 at 540 (Cox Am. TM Cases) (emphasis added). 280. 4 Abb. Pr. R. 156; Cox Am. TM Cases 194 per Hoffman J. (N.Y.). 281. Supra note 68 at 385 (of Manning & Granger), p. 157 (of ER). 282. Text supra note 68.

1082 Vol. 106 TMR actually lifted within this decision.283 Thus, Fetridge was not a case where an injunction was maintained, let alone where significant monetary relief was awarded as against an infringer who acted in good faith.

Accordingly, returning to the above bald statement in Filley v. Fasset, this should be understood as indicating either of the following principles: (i) “If the name as used is calculated to deceive, the intention to deceive [for the purposes of injunctive relief] is to be inferred therefrom.” or (ii) “If the name as used is [so obviously] calculated to deceive, the intention to deceive [for the purposes of monetary relief might possibly] be inferred therefrom.”

The same comments can be made regarding a dictum in Singer Manufacturing Co. v. Loog (1882).284 Lord Chancellor Selborne for the Court stated that one of the issues in the case was whether the defendant’s documents (which were allegedly causing confusion) “were fabricated with a view to such a fraudulent use of them, or unless they were in themselves of such a nature as to suggest, or readily and easily lend themselves to, such a fraud.”285 At first glance, the second part of that dictum implies that fraudulent intention is not required, as if it can simply be presumed from the confusing “nature” thereof. However, once again such presumption actually confirms that intention is relevant. If his Lordship instead had in mind that fraudulent intention is an automatic consequence of a finding of confusion, there would have been no point to the first part of the excerpt; there would never be a case needing to establish that the usage was fraudulent if fraudulent intent is presumed whenever confusion is established. In addition, it is proposed that the wording of the second part of the excerpt refers to cases involving a high degree of confusion, rather than mere confusion. Again, that second part refers to whether the documents were “in themselves of such a nature as to suggest . . . such a fraud.” He also used the word “suggest” rather than saying fraud was an automatic consequence of confusion. Still further, L.C. Selborne indicated agreement with the principles within the decision of Singer v. Wilson (1877) wherein the distinction between intention not being necessary for an injunction and it being necessary for a monetary award was understood and enunciated.286 Also, later in Loog, Lord Selborne expressed the conclusion that, in the circumstances of that case, the use of certain phraseology by the defendant “is not evidence of any

283. This was due to the mark having already been used by others, and thereby being treated as descriptive. 284. 8 AC 15 (HL). 285. Id. at 21 (emphasis added). 286. Text supra especially at notes 105 to 110.

Vol. 106 TMR 1083 fraudulent purpose or intent.”287 This comment clearly indicates that intention is not presumed from a finding of confusion, but only from a high degree of confusion. This, in turn, confirms that intention is still relevant.

Further examples of dicta which have been, or could be, misconstrued along these lines are found in Cartier v. Carlile (1862) where Sir Romilly stated: “[I]f it be found that there has been a colorable imitation of a trade mark, it follows that the person making it intended to imitate the genuine trade mark belonging to some individual . . . .”288 Similarly, as mentioned earlier,289 he held that, where the defendant’s trademark is found to be a colourable imitation of the claimant’s trademark: “[T]here must be imputed to a person imitating a trade mark a desire to gain the advantages which are attached to the use of that particular trade mark . . . .” But, Sir Romilly was referring to a situation where the defendant purposely imitates someone else’s mark without knowing their name and willfully abstaining from finding it out.290 Understandably that particular lack of knowledge combined with willful blindness does not absolve defendant from liability for monetary relief, and this was the extent of the defense on the basis of good faith. Thus, for this further reason, this dictum is not support for the notion that any other type of good faith is irrelevant.

Another passage that can be defused on the basis of this mix-up is in Saxlehner v. Apollinaris Co. (1897). Kekewich J. therein strongly expressed the presumption that, where confusion is established, “no evidence is required to prove the intention to deceive, nor ought time and money be expended on any such evidence.”291 However, the full statement refers to cases where confusion is established “on the face” of the defendants’ goods, meaning where confusion is so blatant that the defendants intention is obviously based on the surrounding circumstances. In addition, within the same passage, Kekewich J. added: “If, on the other hand, a mere comparison of the goods, having regard to surrounding circumstances, is not sufficient, then it is allowable to prove from other sources that what is or may be apparent innocence was really intended to deceive.”292 The fact that “it is allowable to prove [intention] from other sources” confirms that intention is worth being proven. That is, nowhere did Justice Kekewich actually hold that intention was an automatic 287. Supra note 284 at 26. 288. Supra note 75 at 298 (emphasis added). 289. Text at supra note 75. 290. Id., especially text at supra note 78. 291. Supra note 22 at 900-901. 292. Id. (emphasis added).

1084 Vol. 106 TMR consequence of the marks being confusing; he did not hold that intention can be presumed (from the likelihood of confusion) in the sense of being a foregone, necessary consequence of such likelihood of confusion. He held that intention could either be proven on the basis of a strong likelihood of confusion (“having regard to surrounding circumstances”) or be proven “from other sources,” including any direct evidence thereof. One way or the other, intention is worth being proven.

The possibility of a mix-up when reading Saxlehner is even greater when considering that the above sentence293 was awkwardly intermixed with a different principle that looks the same but is the inverse thereof. In the same way that intention can be inferred on the basis of confusion, Kekewich J. was also mentioning that confusion can inferred on the basis of intention. That is, where an intention to deceive is found, the court can infer that intention has been, or will be, effective in achieving that intention. In particular, Kekewich J. stated:

The sound rule is that a man must be taken to have intended the reasonable and natural consequences of his acts, and no more is wanted. . . . If the intent to deceive be once established, it is but a short step, though it is a step and not an inevitable one, to the conclusion that the intention has been fulfilled and that the goods are calculated to deceive [here meaning confusing].294

Coincidently, some of the authorities indicating that confusion can be inferred on the basis of intention constitute, or can be traced back to, some of the same authorities that indicate intention is irrelevant.295 In any event, the basic point here is that the similarity of the presumptions has added to the overall confusion within the law, particularly the notion that honest intention is irrelevant.

293. Text at supra note 291. 294. Supra note 22 at 900-901 (emphasis added). 295. E.g., Cadbury Schweppes Pty. Limited v. The Pub Squash Co. Pty. Limited (1980), [1981] 1 WLR 193; [1981] 1 All ER 213; [1981] RPC 429 (JC PC NSW) cites Lindley LJ in Slazenger & Sons v Feltham & Co (2) (1889), 6 RPC 531, 538 which, in turn, was an appeal from a decision of Kekewich J. Another example is ConAgra v. McCain Foods (1992 Austr.), supra note 48, at para. 127. See also the BARBIE case (2006) above note 57 at para. 90; Sir Duff in Hurlbut (1925) supra note 138 at 147, 148 (citing Burgess); Parker-Knoll v. Knoll Int’l (1962) supra note 35 at 273, 290; Reddaway v. Bentham (1982), supra note 123 at 507 (per LJ Lindley).

Vol. 106 TMR 1085

Mix-up #7: Not Distinguishing the Irrelevance of the Defendant’s Good Faith View on the

Likelihood of Confusion for the Purposes of Assessing That Likelihood

It is commonly known that confusion (or “deception” etc.) is assessed by the court putting itself in the position of the typical customer. It is not assessed from the point of view of the defendant but this does not mean that the defendant’s belief that its use was not confusing is irrelevant to the issue of monetary relief. Saying that the defendant’s good faith belief as to the likelihood of confusion is irrelevant as to the issue of confusion is not the same as saying that such good faith is also irrelevant as to the issue of monetary relief.

However, there are judicial comments that reflect or otherwise contribute to mixing-up these two concepts. For example, the excerpt reproduced above from the Barbie case296 contained the comment that “the relevant perspective of s. 6(2) of the Trade-marks Act is not that of the respondent but rather the perception of the relevant mythical consumer.” This was then immediately followed by the statement that “[m]ens rea is of little relevance to the issue of confusion.” Again, this may be correct in terms of intention being irrelevant to the issue of confusion but the dictum could easily be misread as if intention is also irrelevant to liability for monetary relief or the quantum of monetary relief.

IV. QUESTIONING SOME GENERAL RATIONALES FOR DEEMING INTENTION TO BE IRRELEVANT

General rationales have rarely been provided to support the notion that good faith is irrelevant to the issue of monetary relief. This is understandable in that so many decisions have indicated that intention is irrelevant simply as a result of one or more mix-ups as discussed above.

The few rationales that have been judicially expressed appear to be open to question, as discussed below.

A. “The Damage is the Same” One of the few rationales given for the irrelevance of intention

is the idea that the damage to the plaintiff is the same whether or not the damage was intended, and thus the plaintiff should be compensated in either situation. This rationale is seemingly expressed in the following cases:

In Draper v. Trist (1939), Sir Green M.R. stated “I must dissent, however, from the view that the only case in which it 296. Supra note 61.

1086 Vol. 106 TMR would be permissible to award damages to the plaintiff would be a case in which it was shown that the middleman had resold fraudulently. . . . [The plaintiff] will suffer precisely the same damage if the ultimate purchaser from the middleman is in fact misled by [the defendant’s] deceptive description, whether or not the middleman is himself fraudulent in his intent.”297

In a similar vein, in Coffeen v. Brunton (1849), McLean J. held that the principle expressed in such cases as Millington (namely, that an intentional fraud is not necessary) was the correct view of the principle “for the injury will be neither greater nor less by the knowledge of the [defendant].”298 His Lordship reiterated this upon a subsequent motion within the same legal action, where he stated: “The injury is not the less, though the false representations be made without a knowledge of such interference.”299

However, there are several responses. Firstly, as mentioned, the statements in both of these decisions suggesting that good faith is irrelevant to the issue of monetary relief can be discounted as being mere dicta or as involving one or more mix-ups.300 The comments within those proceedings were not necessarily intended to provide a rationale as to good faith being irrelevant for the purposes of monetary relief.

The statement in Draper can arguably be further set aside by emphasizing different wording such that it reads: “I must dissent, however, from the view that the only case in which it would be permissible to award damages to the plaintiff would be a case in which it was shown that the middleman had resold fraudulently. . . . [The plaintiff] will suffer precisely the same damage. . . .” In other words, the statement was intended to defeat the supplier’s defense that it cannot be liable unless the middleman has in turn resold fraudulently. This feature of the decision was thus addressed to the issue of the middleman’s innocence being irrelevant to the contributory or indirect liability of the supplier, rather than innocence being irrelevant across the board.

Secondly, the notion that “the damage to the plaintiff is the same” whether intentional or not, represents a “slippery slope.” Anyone causing damage, in the field of trademarks or otherwise, would be liable for potentially substantial payments even if the harm was caused by accident without breaching any standard of care, based on the argument that the damage to the plaintiff is the

297. Supra note 31 (emphasis added). 298. Supra note 12 at 519 of 4 McLean; 136 of Cox Am. TM Cases. 299. Coffeen v. Brunton (2) (1851), 5 McLean 256; Cox Am. TM Cases 132; 5 F. Cas. 1186 (emphasis added). 300. As to Draper, see text supra notes 139, 227, 252. As to Coffeen, see text at supra notes 174-175.

Vol. 106 TMR 1087 same. It would also render irrelevant other equitable factors to be considered in all trademark cases, such as acquiescence or delay.

A similar response is that, while the damage to the plaintiff may be the same (whether the damage be intentional or not), the wrongfulness of the defendant’s conduct is not the same. If the defendant acted in good faith, the injury to the plaintiff was an accident. For example, in some cases the plaintiff may have undertaken the very minimum obligations to obtain a registration or to otherwise establish an enforceable reputation for purposes of statutory or common law passing off, while the defendant may have undertaken significant effort to secure sales — such as marketing, advertising, personalized sales calls, production, product design, logistics, managing employees, assuming the risk of a loss, etc. — and yet the defendant is expected to hand over all of its profits. Arguably, in such cases, the plaintiff is effectively awarded a windfall. If one of the objectives of such laws is to encourage fair, rather than unfair, competition, awarding full monetary relief in such cases may not achieve that objective.

Still further, simply as a matter of precedent, the view that the damage is the same, intentional or not overlooks the jurisprudence discussed herein supporting the principle that innocence should indeed be relevant. In particular, the idea that the damage is the same was expressed within Singer v. Wilson (1877) where Lord Cairns discussed how innocence was irrelevant because, intentional or not, “in all these cases the injury to the plaintiff is just the same.”301 Nevertheless, even with this notion in mind, the overall decision clearly allowed for the possibility that innocence should be relevant as to the issue of monetary relief.302

B. Breach of Property Right Another rationale is that monetary relief should flow

regardless of good faith because the trademark right is a proprietary right. But who said so? And why? Who said trademarks constitute “property,” and did they actually say so for the purposes that significant monetary relief should flow automatically from infringement?

Some judicial statements as to trademarks or goodwill constituting “property” are completely ambiguous as to what, if anything, was intended by that term.

Some of these statements are not ambiguous but are directed to different issues, such as whether such rights are assignable or

301. Supra note 105 at 488. 302. As discussed above, especially within text at notes 105 to 110.

1088 Vol. 106 TMR entitled to protection by injunction.303 Some statements of Lord Westbury in particular have been distinguished.304 That is, it begs to be proven that any of such statements of Lord Westbury or otherwise were directed to the issue of whether a plaintiff could collect substantial damages despite the good faith of the defendant.

Some statements do specifically suggest that monetary relief should flow as a matter of property but they were derived, at least initially, on the basis of circular reasoning as follows: firstly, as mentioned above, Lord Chancellor Cottenham in Millington indicated that intention was not required for the purposes of injunctive relief. It was then stated by others that such rights in trademarks must be a form of property given that generally intention is not required to protect property rights; being a form of property, it was then stated that intention was not required for the purposes of monetary relief.305 In short: intention was not required for injunctive relief, and thus trademarks are property; and thus intention is not required even for monetary relief. However, as discussed in Mix-Up #1, Lord Cottenham did not go that far; the first part of the syllogism was not intended to support the final part.

Not realizing this mix-up, the second and third parts of the syllogism were expressed, for example, by the Delhi High Court in the passing off case of Prina Chemical Works v. Sukndayal (1974).306 The Court first observed that “[i]n general the violation of a right to property is actionable even though it is innocent.”307 Then, the Court quoted308 the famous dictum in Draper v. Trist (1939) where Lord Goddard stated: “In passing-off cases . . . the true basis of the action is that the passing off by the defendant of his goods as the goods of the plaintiff injures the right of property in the plaintiff . . . .”309 Then, the Delhi High Court proceeded to conclude: “It is now well settled that proof of fraud is unnecessary, whether the relief asked for be an injunction or damages.”310

Another example of this circular reasoning is found in Sund v. Beachcombers Restaurant Ltd. (1960). The Court similarly quoted the dictum from Draper to the effect that passing off “exists as a

303. As a statutory example, in India, the Specific Relief Act of 1877 (Act 1) declared that “a trade mark is property” but this was merely directed to obtaining a perpetual injunction. 304. Text above at notes 88-98, 208-212. 305. Some examples are discussed next. See also text supra notes 10, 42, and 48. 306. Supra note 39 at paras. 20–35. 307. Supra note 39 at para. 20 (emphasis added). 308. Supra note 39 at para. 23. 309. Supra note 31 at 526 (All ER) (emphasis added). 310. Supra note 39 at para. 24 (emphasis added).

Vol. 106 TMR 1089 remedy for the protection of a proprietary right” and then proceeded to say: “Since violation of a right to property is actionable even though unintentional . . . it is unnecessary here for the plaintiffs to establish deliberate intent to deceive on the part of the defendants.”311 Nothing here truly explains why trademarks are property, and why the good faith intention is irrelevant. Nothing here explains why it is fair and just to award substantial monetary relief against an innocent infringer.

Saxlehner v. Apollinaris Co. (1897) is another case stating that monetary relief flows on the basis that the trademark right constitutes a species of property. The weakness of this rationale is yet another indication of the unsoundness of the statements in this particular case312 as to good faith being irrelevant to the issue of monetary relief.

In summary, it has not been convincingly established that substantial monetary relief should flow regardless of good faith because trademark rights have, in certain other respects, been treated or referred to as “property.”

V. CONCLUSION: THE RELEVANCE OF INTENTION

SHOULD BE RECONSIDERED A. Reconsidering Its Relevance

as a Matter of Fairness and Justice It has not been clearly and soundly stated that intention is

irrelevant to the awarding of substantial monetary relief. However, there are numerous decisions in Canada and abroad suggesting that defendant’s “intention” is “irrelevant” to the awarding of damages or profits in matters of passing off (unfair competition) and trademark infringement.313 Such indications are based upon one or more legal mix-ups314 and questionable rationales,315 Iand therefore should be reconsidered by the respective courts and legislators.

Very few if any judges in passing off or trademark infringement cases have flatly stated it would be unfair and unjust to take good intention into consideration in deciding whether to award substantial monetary relief. Some judges (and commentators) have clearly indicated it would be unfair and unjust not to do so, thereby suggesting that the dicta in Part II 311. Supra note 32 at 229 (emphasis added). 312. Supra note 22. 313. As discussed in Part II and Part IV.A. 314. As discussed in Part III. 315. As discussed in Part IV.

1090 Vol. 106 TMR should be reconsidered on that ground alone. Some examples are as follows:

In Straus v. Notaseme Co (1916),316 Justice Oliver Wendell Holmes had reversed the order for profits as against a good faith defendant, even in respect of sales after the defendant had been put on notice by the plaintiff. The Justice clearly felt it would be unjust to award significant monetary relief without being able to take into account the defendant’s good faith.

In Marengo v. Daily Sketch & Sunday Graphic Ltd. (1948), Lord duParq noted: “it did not seem right, by the standards of the common law, to make a man pay damages for what amounted to an innocent misrepresentation.”317

In Colbeam Palmer Ltd. v. Stock Affiliates Pty. Ltd. (1968) Windeyer J. agreed with such cases as Edelsten v. Edelsten and Moet v. Couston that, even in a case of infringement of a registered mark, “it lies upon a plaintiff who seeks an account of profits to establish the profits were made by the defendant knowing that he was transgressing the plaintiff’s rights.”318 It was explained therein that the very focus of this particular form of monetary relief is to strip a defendant of profits as to which it would be “unconscionable that he retain.”319 “These are profits made by him dishonestly, that is by his knowingly infringing the rights of the proprietor of the trade mark.”320 This is all in contrast to the questionable notion of automatically stripping a defendant of profits where the defendant has not acted dishonestly and knowingly.

Some commentators reviewing the issue have also expressed similar opinions. For example, E.R. Coffin said the following within his conclusion in his 1903 article regarding the role of fraud in unfair competition:

Even though it be conceded that a defendant who has innocently and inadvertently passed off his goods as plaintiff’s . . . should be restrained from a continuance of such acts, it does not necessarily follow . . . that an innocent defendant must pay damages [or account for profits] for the period prior to notice of the plaintiff’s rights. It is thoroughly consistent and equitable, that a defendant who cannot set up absence of a

316. Supra note 130. 317. 1 All ER 406, 65 RPC 242, 253 (HL) (emphasis added). 318. 42 ALJR 209; [1972] RPC 303 at 310 (Aus HC). (emphasis added) (paint sets) Admittedly, Windeyer J expressed some softness as to the availability of damages for innocent infringement but not as to an accounting. And even as to damages, he acknowledged such cases were “conflicting” on the issue, and certainly did not discuss the issue to the extent set out within this paper. 319. Id. (emphasis added). 320. Id. (emphasis added).

Vol. 106 TMR 1091

fraudulent intent as a bar to an injunction, should be nevertheless allowed to prove it in exemption from damages or an accounting.321

Similarly, author Catherine Best in her 1985 article relating to intention expressed the view that damages should not automatically run from the commencement of the period of infringement, but only from the point at which the infringer knows that it is passing off or infringing (including acting recklessly or with willful blindness, or lacking a reasonable belief as to innocence).322

It is also curious that some authorities and practitioners appear to accept that good faith intention can be taken into account when it comes to awarding monetary relief pursuant to the equitable remedy of an accounting of the defendant’s profits, and yet not for the purposes of awarding monetary relief in the form of compensatory damages. For example, Prof. Grismore in his 1929 article indicated that an accounting of profits should not be awarded against innocent infringers because it amounts to imposing a penalty.323 Meanwhile, within the same article, he supported awarding monetary relief against innocent infringers in the form of damages. With great respect, this appears to be inconsistent given that the amount of damages can be as substantial as the amount of a defendant’s profits.324 Accordingly, awarding such amount in the form of damages would effectively constitute imposing a penalty in the same way it would, as indicated by the Professor, constitute a penalty when such amount is awarded by means of an accounting.325

B. Some Suggestions It is respectfully suggested that the irrelevance of good

intention in respect of substantial damages or an accounting of profits be reconsidered for causes of action such as passing off, trademark infringement, and dilution, in Canada and elsewhere where applicable. The mix-ups identified above should also be avoided. In particular:

321. 1903 Coffin article supra note 23 at 290 (emphasis added). 322. Supra note 27 at 236. 323. Supra note 10 at 867-8. 324. Damages can be as substantial as the defendant’s profits such as where the defendant’s sales price is lower than the plaintiff’s, or where the defendant’s expenses are higher in having innocently developed and promoted its product under a trademark later deemed to be infringing, as in the hypothetical mentioned above in the Introduction. 325. Prof. Grismore had even indicated that, while the two kinds of relief (supposedly) involve fundamentally different principles, the problem is “fundamentally the same.” Supra note 10 at 867-8.

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(1) While good intention might be irrelevant to the awarding of a permanent injunction, it can still be relevant to the awarding of substantial monetary relief. Intention may be “irrelevant” to the awarding of forward-looking relief (such as injunctions, oppositions or delivery-up of offending labels) because bad intention is imputed after defendant becomes aware—or defendant acts recklessly or with willful blindness rather than mere negligence or innocence—that its ongoing conduct is wrongful especially upon such pronouncement at trial. But such imputing of intention does not apply in respect of conduct prior to that point.326

(2) Even when focusing on the relevance of intention with respect to monetary relief, a distinction should be observed between its possible relevance as an element of liability for such relief and its possible relevance as a factor as to quantum. If it is an element, the defendant would presumably not be liable for substantial monetary relief. If it is not an element, it could still be a factor which mitigates or tempers quantum.327

Assessing the relevance of intention with respect to monetary relief involves difficult foundational issues. What is the true rationale for awarding monetary relief in matters of passing off and trademark infringement? The theory based upon property (where intention is irrelevant) has been questioned above.328 But the theory based upon fraud (where intention is relevant) could also be questioned. For example, the theory based upon fraud seems to rely upon an analogy to the law of deceit but despite the review of so many early cases it is difficult to find any that express this analogy. In addition, as many have noted, damages for deceit are awarded to the party deceived rather than the defendant’s competitor.

In assessing the relevance of intention with respect to monetary relief, it would also be valuable to consider how intention is treated in connection with other causes of action and in other jurisdictions to assess the applicability of the rationales for these other decisions and laws to the laws of passing off, trademark infringement and unfair competition.

In the interim, it may be just in many cases to award a simplified discretionary amount, less than full damages or profits but greater than no amount, based upon the overall circumstances, whether under the label of damages or an accounting. The downside of any uncertainty created as a result of such a fee

326. Supra Part III, Mix-up #1. 327. Supra Part III, Mix-up #5. 328. As discussed in Part IV. B.

Vol. 106 TMR 1093 assessment procedure would often be outweighed by the benefits of added flexibility of reducing the difficulty of other issues, such as resolving all of the accounting issues as to what truly constitutes the plaintiff’s lost profit attributable to the defendant’s unlawful conduct or the defendant’s profits attributable to the infringement. This intermediate discretionary amount should also ameliorate the harshness of an innocent defendant having to pay full monetary relief while providing the plaintiff with at least some compensation and also encouraging other traders to exercise greater care in terms of avoiding infringement or passing off.