Federal Court of Appeal confirms that statutory passing off requires damage

A recent Federal Court of Appeal (FCA) decision, PharmaCommunications Holdings Inc. v. Avencia International Inc., confirms that proof of actual or potential damage is required for statutory passing off.

PharmaCommunications’ lawsuit alleged that Avencia had committed statutory passing off against PharmaCommunications’ unregistered trade-marks PharmaCommunications and Pharmacommunications by using Avencia’s Pharmacomm trade-name. The Federal Court dismissed PharmaCommunications’ claim, as the plaintiff had not filed any evidence of actual or potential damage before the Court.

The plaintiff appealed to the FCA. While the plaintiff admitted that FCA previously ruled in another case (BMW Canada Inc. v. Nissan Canada Inc.) that statutory passing off requires actual or potential damage, an element of the common law passing off test, the plaintiff argued that the BMW should not be followed.

The FCA disagreed, as PharmaCommunications had not demonstrated that the BMW decision was wrong. The FCA noted that statutory passing off was merely a codification of common law passing off and thus there are no longer any  ” ‘significant differences’ between the statue and the common law”. Further, the BMW decision followed the Supreme Court of Canada’s ruling that the same principles inform common law and statutory passing off.  Therefore, the BMW decision was correct.

PharmaCommunications also argued that it is unnecessary to show actual or potential damage in a statutory passing off claim, and that the court is entitled to presume damages will occur where a likelihood of confusion between trade-mark has been demonstrated. The FCA rejected that argument, as that same argument was rejected in the BMW case and the plaintiff had not provided any reason why BMW should not be followed in that regard. Given that the plaintiff’s arguments as to why proof of damage was not required had no legal basis, and the plaintiff had not challenged the Federal Court’s finding that PharmaCommunications had not led any evidence of actual or potential damage, the FCA dismissed the appeal.

The lesson? Plaintiffs will not be successful in a passing off action in Canada – whether common law or statutory – without evidence of actual or potential damage.

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