In February 2022, in 1196278 Ontario Inc. dba SASSAFRAZ v 815470 Ontario Ltd. dba SASSAFRAS COASTAL KITCHEN, 2022 FC 116 the Federal Court granted the well-known Toronto restaurant Sassafraz judgment against the operator of a restaurant operating as "Sassafras" in the Niagara region of Ontario.
Sassafraz has operated its restaurant under its SASSAFRAZ name and mark for over 20 years, and in that time has become a well-known local landmark and popular fine dining destination in Toronto, and has received extensive Canadian and international press coverage over the years. In the summer of 2000, Sassafraz became aware of the planned launch of a restaurant in the Niagara region operating under various names and marks consisting of or including "SASSAFRAS". Despite being given notice of Sassafraz's objections, the operators of the Sassafras restaurant business proceeded with their launch.
As a result, Sassafraz restaurant commenced proceedings in the Federal Court for violations of its trademark rights in the Federal Court of Canada. As the owner of a Canadian trademark registration for its SASSAFRAZ trademark in association with restaurant, bar, and catering services, the Applicant brought claims for trademark infringement and depreciation of goodwill of its registered SASSAFRAZ trademark based on the use of the confusingly similar "Sassafras" mark and name with essentially identical services.
In its decision, the Federal Court found that both trademark infringement and depreciation of goodwill had been established.
With respect to infringement, the Court found there was a strong resemblance between the Applicant's SASSAFRAZ mark and the Respondent's various SASSAFRAS-formative marks and names. All other relevant confusion factors were similarly found to weigh in the Applicant's favour. The Court rejected all of defences that were offered, including that the geographic separation between the parties' businesses, somewhat different cuisine and price points offered by the parties, the absence of evidence of actual confusion, and Sassafras restaurant's claim to "never to have heard of the Applicant's SASSAFRAZ restaurant" prior to opening its own restaurant made confusion unlikely.
In so doing, the Court recognized that geographic separation is irrelevant under the hypothetical test for infringement of a registered trademark, that the Applicant's registered rights in connection with "restaurant services" were not confined to any particular type of cuisine or price point, that no adverse inference could be drawn from the absence of actual confusion given the lengthy shutdowns and disruptions of normal business operations of restaurants in Ontario over the past year, and lastly that the Respondent's knowledge of infringement or 'mens rea' was of little relevance to the issue of confusion.
In finding for the Applicant on the depreciation of goodwill claim, the Court noted that: "In addition to likely weakening the upscale, fine-dining reputation of that mark, this difference in focus and branding likely has the effect of blurring the image of the mark. It also has the likely effect of "whittling away" the mark's power to distinguish the Applicant's products… Moreover, the Respondent's ongoing use of the highly similar SASSAFRAS Marks necessarily results in eroding the Applicant's ability to control the manner in which its SASSAFRAZ mark is used. That ongoing use of such a highly similar mark is also a form of free-riding on the reputation of the SASSAFRAZ mark, which was built up over almost a quarter century of significant effort on the part of the Applicant."
In addition to granting a permanent injunction against further use of the "SASSAFRAS" marks and names, the Court also granted substantial awards of damages and costs.
The case is a good illustration and useful reminder that:
- There is a significant value to obtaining the protection afforded by a registered Canadian trademark. A trademark registration provides nationally-enforceable trademark rights. Unlike relying on unregistered or common law trademark rights, enforcing a registered trademark in Canada does not depend on demonstrating a protectable reputation in the infringer's specific geographic market. Further, remedies for trademark infringement granted by the Federal Court of Canada will include a permanent injunction which is of immediate effect across the entire country.
- For an owner of Canadian trademark rights, there are distinct advantages of proceeding by way of the Federal Court's summary "application" procedure in appropriate cases. The application procedure is quick, cost-effective, and proceeds to Court on the basis of a "paper record" consisting of affidavit evidence, avoiding the need for costly discovery or trial. The application procedure is particularly well-suited where obtaining a permanent injunction rather than extensive monetary remedies is of primary importance. In this case, by proceeding by way of application, the case was heard and Judgment and a permanent injunction granted in just over 12 months.
- Before launching a new business it is always advisable to perform trademark clearance searches with the assistance of Canadian trademark counsel. The costs of failing to properly clear a new trademark can be significant. In the face of an objection from a trademark owner, in addition to the disruption and costs of later rebranding the business, a party found to infringe another's trademark will incur out of pocket costs of litigation, and will likely be responsible for awards of damages and costs.
Should you have any specific questions about this article or would like to discuss it further, you can contact the authors or a member of our Trademarks, Brands & Designs Group.
Kelly Gill and James Green of Gowling WLG acted for Sassafraz restaurant.