Décision

Solutions Abilis inc. c. Groupe Alithis inc.								2013 QCCS 1179
JP 1900     SUPERIOR COURT
CANADA
PROVINCE OF QUEBEC
DISTRICT OF					MONTREAL
No:			500-17-075551-138
DATE:		MARCH 21, 2013
______________________________________________________________________
BY	THE HONOURABLE						MR. JUSTICE MARK G. PEACOCK, J.S.C.
______________________________________________________________________
SOLUTIONS ABILIS INC.,
Plaintiff
v.
GROUPE ALITHIS INC.,
-And-
ALITHIS SERVICES-CONSEILS INC.,
Defendants
______________________________________________________________________
JUDGMENT
______________________________________________________________________

Introduction

 

[1]           An Interlocutory Injunction is sought by Solutions Abilis Inc.[1] against Groupe Alithis Inc. and Alithis Services-Conseils Inc.[2]

 

[2]           Abilis is a Montreal-based company founded in 1996 which provides specialized consulting services for computer systems. It has approximately 160 employees and gross revenues of $20 Million.

 

[3]           The Defendant Groupe was previously known as "Les Conseillers en informatiques d'affaires C.I.A. inc." (hereafter "C.I.A.") and the Defendant Services was previously known as "Sinapse Interventions Stratégiques inc." (hereafter "Sinapse"). The Defendants employ approximately 500 employees and have gross revenues of $60 Million. They also provide computer consulting services to large and medium-sized private and public organizations.

 

[4]           On June 18, 2012, C.I.A. acquired the shares of Sinapse.

 

[5]           Between January 2012 and August 2012, C.I.A. and later C.I.A. and Sinapse, held discussions with Abilis concerning a potential acquisition of Abilis.

 

[6]           These talks broke off in August 2012 when Abilis considered the amount offered for its acquisition to be insufficient.

 

[7]           On September 19, 2012, the Defendants Groupe and Services individually and the Defendants collectively had completed the formalities to register trademarks for: Alithis Consulting and Alithis, as well as Alithis Services-Conseils inc.

 

[8]           On November 20, 2012 - a few months later - C.I.A.-Sinapse changed their names to the impugned names of the Defendants Groupe and Services.

 

[9]           The proximity in the timing of these two events - the breaking-off of acquisition talks and the start of using the "Alithis" mark - had an effect on Abilis who issued a "cease and desist" letter on December 18, 2012 and began injunction proceedings in mid-January 2013 in which, at paragraph 31, it alleges:

 

"Considérant les pourparlers d'affaires entre les parties et la connaissance des méthodes d'affaires de la Demanderesse, les Défenderesses ont agi de façon intentionnelle et planifiée en employant le terme ALITHIS, les Marques ALITHIS et autres noms et marques de la même famille afin d'offrir les services similaires voire identiques, à ceux offerts par la Demanderesse;"

 

[10]        In support of their positions, the parties have filed extensive documentation shown in Schedule A hereto.

 

[11]        At the all-day hearing on the interlocutory injunction, Abilis presented notes and authorities, as did the Defendants.

 

[12]        As advised to the parties, the Court has relied on those notes and authorities and their references, as well as the oral argument to prepare this interlocutory judgment.

 

[13]        Abilis bases its request for an interlocutory injunction on a violation of s. 6 of the Trade-marks Act[3] alleging that there is likelihood of confusion with its trade name, its registered trade names and its commercial names; passing off under s. 7, Act; and the "quasi-délit" of unfair competition under art. 1457 of the Civil Code of Québec ("C.C.Q.").

 

A-        Governing Legal Principles: Interlocutory Injunction

 

[14]        An interlocutory injunction under art. 752 of the Civil Code of Procedure ("C.C.P.") requires:

 

"In addition to an injunction, which he may demand by a motion to institute proceedings, with or without other conclusions, a party may, at the commencement of or during a suit, obtain an interlocutory injunction.

 

An interlocutory injunction may be granted when the applicant appears to be entitled to it and it is considered to be necessary in order to avoid serious or irreparable injury to him, or a factual or legal situation of such a nature as to render the final judgment ineffectual."

 

[15]        In 1975, in the case of Société de développement de la Baie James v. Kanatewat[4], Mr. Justice Owen established the approach that Quebec courts have followed since:

 

"At the interlocutory injunction state these rights are apparently either (a) clear, or (b) doubtful, or (c) non-existent.

 

     (a)  If it appears clear at the interlocutory stage that the Petitioners have the rights which they invoke then the interlocutory injunction should be granted if considered necessary in accordance with the provisions of the second paragraph of Article 752 C.P.

 

     (b)  However, if at this stage the existence of the rights invoked by the Petitioners appears doubtful then the Court should consider the balance of convenience and inconvenience in deciding whether an interlocutory injunction should be granted

 

     (c)  Finally if it appears, at the interlocutory stage, that the rights claimed are non-existent then the interlocutory injunction should be refused."

 

[16]        The injunction remedy is codified under art. 752 C.C.P. Due to its origins in English law, it is instructive to review the objective of an interlocutory injunction as stated by Lord Diplock in the leading House of Lords decision of American Cyanamid Co (No 1) v. Ethicon Ltd[5] and the balancing the courts must undertake to achieve that objective:

 

"The object of an interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolve in his favour at the trial; but the plaintiff's need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff's undertaking in damages if the uncertainty were resolved in the defendant's favour at the trial."

 

[17]        It is important for the courts to establish and apply clear and consistent criteria in this area since the stability of commercial relations requires that the parties have reasonable certainty of the legal principles under which they must operate.

 

[18]        For this reason, the Court refers to a critical and lengthy passage from the 1995 Court of Appeal decision in Brassard v. Société zoologique de Québec inc.[6]:

 

"… Moins l'apparence de droit s'avère forte, plus la nécessité de l'examen attentif du caractère irréparable du préjudice s'impose, comme celle, éventuellement, du poids des inconvénients:

 

«En l'espèce, si le droit de l'Ordre est clair et certain, le moindre préjudice, ou possibilité sérieuse d'un préjudice, aux droits du public ou à l'ordre public, peut suffire pour rendre nécessaire l'injonction, alors que si son droit est douteux, le préjudice invoqué doit être plus important que celui des appelants.» (opinion de Monsieur le juge Jacques, p. 17)

     Dans l'étude de cette apparence de droit, la prudence s'impose. Le juge n'est pas saisi du fond de la demande. Il ne doit apprécier le mérite des moyens soulevés que pour se satisfaire de l'existence et de la qualité de l'apparence de droit. Dès que les moyens semblent suffisamment sérieux pour offrir une perspective raisonnable de succès, il lui faut conclure que le requérant a satisfait à la première exigence de l'article 752 C.p.c., comme le rappelait monsieur le juge McCarthy:

 

«En ce qui concerne la requête pour injonction interlocutoire elle-même, il importe de souligner immédiatement que ni la Cour supérieure ni notre Cour n'est appelée à décider du droit. Ce qui est en question sur telle requête n'est pas le droit mais l'apparence de droit...» (voir Simon c. Municipalité d'Oka, [1992] R.D.J. 148 , p. 152, opinion de Monsieur le juge McCarthy (C.A.); voir aussi: Favre c. Hôpital Notre-Dame, opinion de Monsieur le juge Bernier, p. 552; Royal Bank of Canada c. Propriété Cité Concordia, [1983] R.D.J. 524 , p. 527, opinion de Monsieur le juge Montgomery (C.A.)" (this Court’s emphasis)

 

[19]        At the interlocutory injunction stage, the court's decision must be made with partial proof and without the luxury of reflection after a full trial. Since in trade-marks litigation the court's interlocutory judgment may constitute the "final word", prudence must be exercised by the presiding judge.

 

[20]        Finally, the Court of Appeal has considered that the role of the interlocutory injunction judge is to act as a “filter”:

 

a)         to ensure on a prima facie basis that the injunction is serious and not frivolous or vexatious. The judge hearing the interlocutory injunction must find that the Plaintiff’s case has a reasonable prospect for success at trial: if so, the first test is met;[7] and

 

b)         because of "… la nécessité d'un contrôle préalable sérieux de l'utilisation d'un tel recours." and "… la nécessité de l'examen critique et attentif de ces demandes, pour en réaliser un filtrage effectif".[8]

 

B-        The Alleged Rights

 

[21]        Mr. Justice Binnie in the Supreme Court of Canada decision of Mattel, Inc. v. 3894207 Canada Inc.[9] underscores the critical importance of  trademark protection:

 

"However, whatever their commercial evolution, the legal purpose of trade-marks continues (in terms of s. 2 of the Trade-marks Act, R.S.C. 1985, c T-13) to be their use by the owner "to distinguish wares or services manufactured, sold, leased, hired or performed by him from those manufactured, sold, leased, hired or performed by others". It is a guarantee of origin and inferentially, an assurance to the consumer that the quality will be what he or she has come to associate with a particular trade-mark … It is, in that sense, consumer protection legislation."

 

[22]        The authors Gervais and Judge[10] confirm that the purpose of trade-mark legislation is twofold:

 

a)          "… first, to protect the public by indicating the source of goods and services in order that purchasers can reduce their search costs, identify the level of quality they seek, and receive a similar product or consistent service over time;" and

 

b)          "… to protect the trade-mark owner against commercial misappropriation of the value and/or the goodwill associated with the mark. Trade-mark law protects the value of the mental link created over time between a product or service and a given mark. …" (this Court’s emphasis)

 

[23]        The same authors note the economic incentive that trade-mark protection provides to trade-mark owners:

 

"… The legal protection of marks gives companies an incentive to invest in making their marks more easily recognized and more easily remembered by consumers so consumers can identify which particular good or service they want and can save time searching for the appropriate product or service. …"[11]

 

[24]        Those same authors underscore the fact that there are certain key principles in trade-mark law relating to its purpose "… which, in turn, define and restrict the scope of trade-mark protection … A mark, in other words, is not protected per se as an isolated object but rather as an indicator of source to distinguish one person's goods (or services) from another person's. Trade-mark law does not provide absolute property rights in the mark itself." (This Court's emphasis)[12]

 

[25]        It is critical that the trade-mark be used to receive the protection of the law. "… The protectable asset comes from the use of the mark because trade-mark law supports the creation of the mark's mental link between consumers and the source and protects that signalling value. The requirement that a mark be used is integral to balancing in trade-mark law, and consistent with the dual purpose of protecting consumers and the intangible business assets. …"[13]

 

[26]        The Act protects both registered and unregistered trademarks.

 

C-        Confusion

 

            1-         Statutory Framework

 

[27]        Art. 6 (1), Act prohibits a trade-mark or trade-name that is confusing with another trade-mark or trade-name. This prohibition applies to confusion: (a) between trade-marks, (b) between a trade-mark and a trade-name and (c) between a trade-name and a trade-mark.[14]

 

[28]        Art. 6 (2), Act defines "confusion" for the Act's purposes to exist where there is a likelihood of confusion: actual confusion is not required.

 

[29]        In this case, the uncontradicted evidence confirms that Abilis’ two registered trade-marks have been used since 2007. The evidence demonstrates that the non-registered trade-marks and names - Abilis and Solutions Abilis Inc. - have been used for in or about the same period.

 

[30]        In art. 6 (5), Act, the federal legislator has provided a general non-exhaustive list of factors to be addressed by the courts to determine whether the likelihood confusion exists and has also required that the courts look at "all the surrounding circumstances" relating to the specific case.

 

[31]        A comprehensive summary of art. 6 (5), Act is provided by Gervais and Judge in their text:

 

"The criteria stated in s. 6(5) can be simplified to five basic concepts to establish confusion: strength, length of use, type of merchandise and service, nature of commerce, and resemblance. These criteria do not have to be equally weighted, and appropriate importance must be given to each criteria based on the circumstances of each case. The "all surrounding circumstances test" set out in s. 6(5) is highly factual and contextual, and the criteria to be considered in s. 6(5) are non-exhaustive.¹⁰⁶ The s. 6(5) factors are applied to both marks. The marks are not to be analyzed in isolation; rather, it should be with regard to all the surrounding circumstances. Confusion is with respect to the source of the wares and services with which the mark is in association and not the marks by themselves. Factors supporting confusion are if the mark is well-known, in use for a long time, the customers are not sophisticated, little time is spent on the purchase, the ware or service is inexpensive, the marks are very similar or identical, the wares or services are very similar or identical, and the purchasers are highly similar or identical. "Evidence of actual confusion would be a relevant 'surrounding circumstance' but is not necessary." Nevertheless, the "lack of any evidence of actual confusion (i.e., that prospective consumers are drawing the mistaken inference) is another of the 'surrounding circumstances' to be thrown into the hopper," and "an adverse inference may be drawn from the lack of such evidence in circumstances where it would readily be available if the allegation of likely confusion was justified."¹⁰⁷ The respective weight of the factors in each case and the conclusion to be reached is largely a factual matter, as explained by Thornson J. in Battle Pharmaceuticals:¹⁰⁸

¹⁰⁶ Mattel, supra, not 2 at para. 54; Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, [2006] 1 S.C.R. 824 , 349 N.R. 111 , 49 C.P.R. (4th) 401 , 270 D.L.R. (4th) 1 at para. 21.

¹⁰⁷    Mattel, supra, note 2 at paras. 55 and 89.

¹⁰⁸    Battle Pharmaceuticals v. British Drug Houses Ltd. (1944), [1944] Ex. C.R. 239, [1944] 4 D.L.R. 577, 4 C.P.R. 48 (Can. Ex. Ct.) at paras. 12-13, affirmed (1945), [1946] S.C.R. 50, [1946] 1 D.L.R. 289, 5 C.P.R. 71, 5 Fox Pat. C. 135 (S.C.C.)."[15]

 

[32]         Finally, an overarching principle to be applied to the five factors is that of "first impression":

 

"… it is not a correct approach to solution of the problem [Ed.'s note: Whether there is confusion within the scope of the Trade-marks Act] to lay the two marks side by side and make a careful comparison of them with a view to observing the differences between them. They should not be subjected to careful analysis; the Court should rather seek to put itself in the position of a person who has only a general and not a precise recollection of the earlier mark and then sees the later mark by itself; if such a person would be likely to think that the goods on which the later mark appears are put out by the same people as the goods sold under the mark of which he has only such a recollection, the Court may properly conclude that the marks are similar. … Moreover, it is the likely effect of the use of the later mark on the minds of ordinary dealers or users generally that must be considered and people as a rule have only a general recollection of a particular thing, rather than a precise memory of it."[16]

 

[33]        In 2011, the Supreme Court of Canada under Mr. Justice Binnie restated the same test:

 

"The test to be applied is a matter of first impression in the mind of the casual consumer somewhat in a hurry who sees the [mark], at a time when he or she has no more than an imperfect recollection of the [prior] trade-mark and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks."[17]

 

                         2-         Overview

 

[34]        This Court will now consider each of these five factors in relation to the present case. From this analysis, the Court has concluded that the likelihood of confusion is clear because of, in particular:

 

a)            the use of a coined term;

 

b)            the strong sonority of three syllables;

 

c)             the use of a symbol at the end of the mark;

 

d)            the prefix and suffix; and

 

e)            the overall visual and auditory impression.

 

            As the Court concludes in the reasons that follow, the "first impression" after considering these factors is that confusion is likely.

 

a.            Strength (Inherent Distinctiveness)

 

i.           Governing Law

 

[35]        The Supreme Court of Canada has confirmed the proper approach to determine if there is an essential aspect of the trade-mark that makes it unique or that makes it stand out:[18]

 

"When considering the strength of a trade-mark, the Act refers both to the inherent distinctiveness (e.g., a coined word) and the extent to which it has become known (i.e., the acquired distinctiveness through use in the market place by which it has become known to consumers as indicating a single source). …"[19]

 

[36]        The Court is satisfied that the two registered trade-marks for Abilis are "inherently distinctive" for the following reasons:

 

a)            Abilis is a "coined" word, with no significance in either English or French;

 

b)            the three syllables create a strong sonority: ab-il-is; and

 

c)             because of the use and the position of the "IT" and "TI" symbol at the end and above Abilis. In the general shape of a computer key, this two-letter symbol (in white type as opposed to the black type of Abilis) not only stands for "information technology" or "technologie informatique" but also creates a strong visual image, both:

 

i.              as adding another syllable "ab-il-it-is" as if it was being inserted into the word "abilis"; or

 

ii.             as the "dot" on the top of the "i".

                                                

 

[37]        "To evaluate confusion, evidence of the state of register and the marketplace in Canada may be assessed for third party marks in use that have elements in common to both the marks at issue and the extent and duration of their use. …"[20] By way of example, this distinctiveness appears clear when Abilis-IT is considered in relation to other trade-marks registered in Canada that start with an "A" and end with an "is".

 

[38]        The Defendants argue that the list of registered marks they filed diminishes or eliminates the strength because: (a) the elements in common - the "A" and the suffix "is" or "ys" - are current in the computer services industry and (b) in addition to which the suffix "is" can be a short form of "information system".

 

[39]        This list lacks evidential weight since, while it proves registration, it does not prove use of these trade-marks, except for five websites which have been filed into evidence. As Abilis also argued, there is nothing to indicate that twelve of these marks are used in Canada and many of these marks have important differences with those of Abilis.

 

[40]        The Defendants provide evidence of these five of different web pages for "Activis", "Aebis", "Altiris", all of which end in the "IS", while the other two "Amesys" and "Artelys" end in "YS". It should be further noted that none of these five names have the "IT" as part of their trade-mark as does "Abilis-it" and as does "Al-"it"-his".

 

[41]        The courts have held that the first portion of a trade-mark is often the most relevant for the purposes of determining distinctiveness.[21]

 

[42]        For the reasons given, this factor of strength weighs in favour of a clearer right for Abilis.

 

                                     b.         Length of Use

 

[43]        "A mark that has been in use for a longer time is more likely to be distinctive."[22]

 

[44]        The Abilis registered trade-marks were registered at the end of 2007 and have been in continuous use since then: a total of 5 years. In comparison, the use by Defendants Groupe and Services individually and the Defendants collectively of "Alitis" began in November 2012, a period of a couple of months before legal proceedings were taken. This factor balances toward a greater distinctiveness in the market place for Abilis.

 

                                     c.         Nature of Services

 

                                                 i.          Nature of Commerce

 

[45]        The Court determines that the nature of the services provided by Abilis and the Defendants Groupe and Services individually and the Defendants collectively are sufficiently similar so as to create a greater likelihood of confusion.

 

[46]        At the outset, it must be noted that the parties - at present - operate two different billing models to deliver their computer services:

 

a)            Abilis has its team of computer consultants working on the clients' computer system problems at the Abilis offices. Abilis works on a fixed-price per job (as opposed to an hourly rate). It is uncontradicted that this approach is unique in this industry; whereas

 

b)            the Defendants charge for their consulting services on an hourly rate basis where its employee-consultants do their work at the client's own premises. In certain situations, the Defendants Groupe and Services individually and the Defendants collectively supply their own employees who can be based in the clients’ premises for months or even years.

 

[47]        However, in both cases, the service being provided is consulting to large and medium-sized firms - both in the public and private sectors - in relation to computer systems. The principal marketplaces are Quebec, the rest of Canada, Europe and the United States. While Alithis may consider its competition to be majors such as Groupe CGL and not the much smaller Abilis, the fact is that they offer competitive services to large and mid-sized organizations.

 

[48]        Next and since the Act requires the Court to consider "all the surrounding circumstances" specific to each case, a relevant circumstance to the nature of the service is how knowledgeable is the likely purchaser, the expense of the purchase and how much time may be spent on making that purchase.[23]

 

[49]        One example is the case of Atomic Energy of Canada Limited v. AREVA NP Canada Ltd..[24] That case involved the potential confusion between the marks AREVA and AECL, where it was decided that there was "no hurried customer" of nuclear products and that because of the lengthy procurement process, it was impossible for the consumer to be confused regarding the source of the services being purchased.

 

[50]        However, the broad application of this case must be treated with circumspection. As the learned authors of Fox indicate[25]:

 

"     It is not relevant that …, consumers are "unlikely to make choices based on first impressions" or that they "will generally take considerable time to inform themselves about the source of expensive goods and services" (para. 43). Both of these - subsequent research or consequent purchase - occurs after the consumer encounters a mark in the marketplace.

 

       This distinction is still important because even with the increased attentiveness, it may still be likely that a consumer shopping for expensive goods and services will be confused by the trade-marks they encounter … However, that cannot mean that consumers of expensive goods through their own caution and wariness should lose the benefit of trade-mark protection. It is confusion when they encounter the trade-marks that is relevant. Careful research which may later remedy the confusion does not mean that no confusion ever existed or that it will not continue to exist in the minds of consumers who did not carry out that research." (This Court's emphasis)

 

[51]        The Defendants argue that because the services cost sometimes tens of thousands of dollars - or more - and that contracts are awarded by tender, that the "first impression" test is less - if not completely - inapplicable. This Court disagrees. Confusion in the trade-marks can affect Abilis’ business in any of the three following examples:

 

a)            confusion in the name could ensure that Alithis was asked to bid on a particular project when in fact the potential client thought that it was seeking a bid from Abilis. The fact that the litigants have strong established client bases does not mean that they do not need - or won't have - to prospect for new clients;

 

b)            conversely, a prospective client may not do business with Abilis if it confuses its name with perceived unsatisfactory work that has been done by the Defendants;[26] and

 

c)             as Abilis has put into evidence, certain work that it gets comes from requests from other divisions than the procurement departments within its established client base.

 

[52]        Accordingly, because of the continuing importance of the first impression test, the nature of the services does not reduce the likelihood in confusion in this specific case.

 

[53]        As stated by the authors of Fox on Trade-marks and Unfair Competition "… In essence, confusion at first impression, sometimes referred to initial interest confusion, damages the goodwill of a trade-mark because it diminishes that mark's ability to distinguish".[27]

 

[54]        Furthermore, while limited, Abilis has filed some evidence of the likelihood of confusion.[28]

 

[55]        Accordingly, the Court finds that this factor balances in favour of Abilis.

 

                                                 ii.         Degree of Resemblance and Essential Features

 

[56]        "To constitute confusion it is not necessary that every part of a trade-mark is copied; it is sufficient if enough is copied to have a tendency to confuse the public."[29]

 

[57]        In the present case, the following comparisons are useful:

 

a)            from a visual perspective, the first letter is the same as well as the suffix "IS" in "Abilis" and in "Alithis";

 

b)            there is a symbol towards the end of the mark: in "Abilis", it is the "computer key with a tail" shape while for "Alithis", it is a stylized asterisk; and

 

c)             the registered trade-mark "Abilis" plus "IT" if looked at visually quickly could be "Abilitis", which is very similar to "Alithis".

 

[58]        It is correct that the first syllable of "Abilis" is "AB" and that of "Alithis" is "AL". While of less weight, the Court also notices that there is an oral resemblance when the two words are pronounced quickly. This is not determinative but is a factor to show the likelihood of confusion.[30]

 

[59]        A review of the jurisprudence demonstrates where courts have found confusion in the past and how close the resemblance has to be for there to be a judicial finding of likelihood of confusion.

 

[60]        The Court of Appeal found confusion existed between the trademark "Citadelle" and the impugned name "Cibelle", used by competing swimming pool manufacturers. The Court of Appeal relied on the following citation from the American case of Baker  v. The Master Printers of New Jersey[31]: "The most successful form of copying is to employ enough points of similarity to confuse the public with enough points of difference to confuse the courts …"[32]

 

[61]        At paragraph 11 of the judgment, the Court of Appeal stated as follows:

 

"À mon avis, le nom utilisé par l'intimée crée de la confusion avec les marques de commerce de l'appelante tant au niveau de l'aspect sonore qu'au niveau de l'aspect visuel."

 

[62]        By way of interest, other examples taken from Kelly Gill, Fox on Canadian Trade-Marks and Unfair Competition, 4^th Edition[33] where likelihood of confusion has been found to exist, by the Trade-marks Opposition Board even where the wares or services were different but related, include:

 

a)            COGNISYS v. COGNOS[34] ("programmes informatiques"/computer programs);

 

b)            MAXI-FRITES v. MEXI-FRIES[35] (food products / restaurant services); and

 

c)             CENTRACOL v. CHERACOL[36] (pharmaceutical products / treatment of coughs, colds and other bronchial and pulmonary affections).

 

[63]         In conclusion, the Court determines at the interlocutory stage that Abilis has proven that the likelihood of confusion is a clear violation of art. 7, 19, 20 and 22, Act and thereby, also a fault under art. 1457 , C.C.Q. and that there is a reasonable prospect of success in a trial on the merits.

 

D-        Irreparable Harm

 

[64]        The Defendants rely on the 2006 Superior Court case of GDG Environnement ltée v. Groupe Bio Services inc.[37] to assert that the law requires "… de preuve susceptible de prouver perte de clientèle ou perte de profits" or loss of goodwill, to meet the criteria of irreparable harm.

 

[65]        Factually, the Defendants assert that this test has not been met because:

 

a)         before they got together with Abilis to discuss merger potential at the beginning of 2012, Abilis and the Defendants had not heard of each other;

 

b)         the Defendants Groupe and Services had never worked for any of Abilis’ principal clients nor had they ever participated in a tendering process which involved the Defendants Groupe and Services;[38]

 

c)         that the markets for their services were in different activities; and

 

d)            both parties have a small number of well-established clients that provide for the majority of their work.

 

            1-         Governing Law

 

[66]        From the excerpt from GDG Environnement ltée v. Groupe Bio Services inc.[39] cited by the Defendants, the Court in that case found no evidence of confusion.[40] Accordingly and with great respect, the references from that judgment regarding irreparable harm are obiter dicta.

 

[67]        This Court is satisfied that the present state of the law on the evidence required for irreparable harm has been summarized by Madam Justice Marie St-Pierre (now of the Court of Appeal) in the case of Manoir Pointe-aux-Trembles inc. v. Eddy Savoie:

 

"[31] La perte potentielle de clients est généralement un préjudice considéré comme irréparable, particuliè-rement en matière de violation de marques de commerce.

 

[32] À cet égard, et sans citer au texte les extraits, j’indique référer de façon spécifique à la décision de mon collègue monsieur le juge Clément Gascon dans l’affaire Agropur Cooperative c. Saputo inc. et al ¹³.  Je réfère aussi à la décision qu’a rendue monsieur le juge Pierre Dalphond, alors qu’il siégeait à notre cour, dans l’affaire Multi-Marques inc. c. Boulangerie Gadoua Ltée¹⁴:

 

« Quant aux préjudices qu’elle peut subir, la jurisprudence semble à l’effet que la simple violation d’une marque de commerce enregistrée et non contestée, est un préjudice suffisant, sans nécessité d’établir un dommage économique précis (Manager Clothing inc. c. Santana Jeans Ltd., (1992) 46 C.P.R. 192; Pizza Pizza Ltd. c. Little Caesar International, (1989) 27 C.P.R. 525 C.F.).  De toute façon, la jurisprudence reconnaît que la perte potentielle de clientèle, même si non quantifiable, est un préjudice irréparable pour les fins d’une injonction (Vidéotron Ltée c. Industries Microlec, [1987] R.D.J. 503 C.A.). »

 

[33] Je réfère aussi à ce qui est écrit dans la décision rendue dans Restaurant Les Halles inc. c. Newgen Restaurant Services inc.¹⁵

¹³      Agropur Cooperative c. Saputo inc. et al, C.S.M. 500-17-016678-032, 8 août 2003, Honorable Clément Gascon, j.c.s., par. 30 et 32

¹⁴      Multi-Marques inc. c. Boulangerie Gadoua Ltée, REJB 2000-16454 (C.S.), par. 20

¹⁵    Restaurant Les Halles inc. c. Newgen Restaurant Services inc., REJB 1997-02222 (C.S.)" [41] (this Court's emphasis)

 

[68]        Again, for the purposes of consistency and continuity, it is important to look at the following two Court of Appeal judgments on the issue of the extent of proof required of loss of goodwill and clientele for irreparable harm.

 

[69]        In 2005, the Court of Appeal stated[42]:

 

"[3] Quant au préjudice irréparable non retenu par le juge de première instance, rappelons que la simple violation d'une marque de commerce constitue un préjudice en soi.

 

 [4]   En outre, les appelants allèguent perte d'achalan-dage et, malgré qu'elle ne soit pas quantifiable, la perte potentielle de clientèle est aussi un préjudice irréparable. (Voir Vidéotron Ltée c. Industries Microlec,  [1987] R.D.J. 503 (C.A.))" (this Court's emphasis)

 

[70]        In 2006, the Court of Appeal further determined[43]:

 

"[42]  Dans Ciba-Geigy, précité, la Cour suprême parle de « dommages actuels ou possibles pour le demandeur »¹⁷, citation qui est reprise dans Kirkbi AG¹⁸. Dans Kisber & Co., précité, la majorité, sous la plume de la juge Rousseau-Houle, écrit que le demandeur, aux fins de son action en commercialisation trompeuse, doit établir qu’« il subit ou est susceptible de subir des dommages à cause de la croyance erronée engendrée par la représentation trompeuse du défendeur »¹⁹.

¹⁷    Ciba-Geigy Canada Ltd. c. Apotex Inc., précité, note 9, à la p. 132.

¹⁸    Kirkbi AG c. Gestions Ritvik inc., précité, note 7, au paragr. 66

¹⁹      Kisber & Co., précité, note 9, à la p. 1351. Voir aussi, à la p. 1357, rubrique 3." [44] (the Court’s emphasis)

 

[71]        This Court understands from this jurisprudence that where the likelihood of confusion is found to be clear that a loss of goodwill and clientele are presumed to follow and are not necessary for the applicant to adduce specific evidence. Should there be specific evidence, this can only assist the applicant's case.

 

            2-         Application to the Facts of the Case

 

[72]        Abilis has alleged that the confusion caused will both affect its goodwill and reputation and cause irreparable harm to the business. It further alleges: (a) that the Defendants Groupe and Services individually and the Defendants collectively knew at least since the Abilis’ demand letter of December 19, 2007 of allegations regarding these trade-marks and commercial names; and (b) that this unfair competition was intentionally undertaken by the Defendants Groupe and Services individually and the Defendants collectively although it states that it is impossible for Abilis to quantify the exact loss to the distinctive trade-mark, its sales, its market share, its clientele or its reputation.

 

[73]        The Court has already determined that the likelihood of confusion is clear. The Court is satisfied that Abilis has met its burden to prove irreparable harm. The fact that the test under the Act is "likely" to cause "confusion" as opposed to "actual confusion" is further support for this conclusion.

 

            3-         Balance of Convenience

 

[74]        Since the Court has found that the first two criteria of Kanatewat have been met, it is not necessary for the Court to consider the question of balance of convenience.

 

[75]        However, should it be subsequently found necessary to do so, the Court will also decide this issue.

 

[76]        The Defendants assert that an interlocutory injunction in favour of Abilis would have an "effet catastrophique" on their business.

 

[77]        The Defendants' President asserts at paragraphs 55 and 56 of his Affidavit:

 

"55.              Une injonction interlocutoire ordonnant à Alithis de cesser immédiatement toute utilisation du terme « Alithis », sous quelque forme que ce soit, à titre de marque de commerce, dénomination sociale, nom corporatif, nom de domaine ou autrement, aurait des effets catastrophiques.

 

 56. En effet, l’injonction recherchée exigerait qu’Alithis change spontanément de nom. Or,  il est impossible de lancer et compléter un processus de changement de nom en moins de quelques semaines, tout au moins. Les conclusions recherchées par Abilis impliquent de :

 

• entamer un nouveau processus de sélection pour trouver un nom qui soit disponible;
• faire les recherches en disponibilité de marques de commerce;

 

une fois un nouveau nom sélectionné :

 

• changer de nom corporatif;
• changer tout le papier à lettre, cartes d’affaires, enseignes, etc.;
• changer le site internet, le nom de domaine, toutes les adresses courriel de 500 employés, etc.;
• informer tous les clients et partenaires d’affaires de la situation;
• faire les changements légaux appropriés auprès de chacun des clients pour lesquels Alithis est accréditée ou en appel d’offres;
• etc.

 

et donc de débourser à nouveau environ 150 000$ pour compléter tout ce processus de changement de nom."[45]

 

[78]        For the reasons that follow, the Court determines that the balance of convenience is in favour of Abilis.

 

[79]        Firstly, the Defendants have invested for a much shorter period of time in identifying this mark with their business. The Defendants were fully aware on receiving Abilis' cease and desist letter of December 16, 2012 that their continued use of the Alithis name put them at risk of just such injunctive proceedings.

 

[80]        Secondly, the Defendants have three times the annual revenue of Abilis and should be better able to withstand the increase in cost necessitated by a name change than the smaller Abilis is able to withstand in terms of the loss of identification of its services.

 

[81]        Thirdly, the Defendants have already been through one name change recently and hence are familiar with the experience and what needs to be done. As the evidence discloses, they decided to change their name from CIA because of confusion arising in the United States between that name and the well-known Central Intelligence Agency of the U.S. government.

 

[82]        Fourthly, the Defendants already commissioned a marketing firm to consider various new names for this purpose and, in fact, twelve names were short listed from which Alithis was finally chosen. Accordingly, the Defendants should be in a position to choose one of the other eleven names without having to start this process all over again.

 

[83]        Fifthly, the Court cannot forget that these companies are in the computer technology business. Accordingly, changing the name electronically, for electronic mail addresses and websites are within its own domain to undertake.

 

[84]        Sixthly, in the cross-examination on his Affidavit, the Defendant's President admitted that a great deal of the Defendants' status and growth is due to the standing of himself and the other senior officer of the company, Mr. Turcotte. This is critical both for goodwill and client development. Both he and his colleague have accumulated decades of experience, contacts and credibility by working for one of the "majors" in this industry. Accordingly, the effect of changing this trade name which has only been in existence since November 2012, will be secondary only.[46]

 

[85]        Seventhly, Abilis is entitled to ensure that there is no confusion between the source of its services and the other services provided by others, including the Defendants. The Defendants have chosen to run the risk of using this name and whatever costs are associated in complying with this present interlocutory judgment cannot override the fact that as a sophisticated enterprise, the Defendants are responsible.

 

[86]        However, the uncontradicted evidence is that it will take several weeks to complete a name change. The Court will suspend execution of its judgment up to noon on Friday, April 19, 2013 to allow for an orderly transition and discontinuance of the impugned name(s). There is no other effective way to ensure the status quo ante is preserved until a trial on the merits.

 

            4-         Security for Costs and Potential Damages (art. 755 , C.C.P.)

 

[87]        Art. 755 , C.C.P. requires that the Court determines whether the applicant should furnish security to pay costs and damages which may result if the Defendants are ultimately successful on the merits. The Court is entitled to exercise its discretion to waive such security "for good reason". The jurisprudence has determined that an acceptable "good reason" is where the applicant's rights appear clear.[47]

 

[88]        Since this Court has determined that the rights of Abilis appear clear, it invokes this reason for dispensing Abilis from furnishing any security.

 

            FOR THESE REASONS, THE COURT:

 

[89]        ISSUES an interlocutory injunction to remain in force until judgment on the merits and ORDERS the Defendants:

 

i.              to cease and desist from all use of the term ALITHIS, either alone or in conjunction with other words or graphic symbols, and in any form whatsoever as a trade-mark, corporate name, commercial name or otherwise; and

 

ii.            to modify the internet site www.alithis.com, including, without limitation, modifying the domain name and visual identifications (including without limitation: colour, font and font size) such that all references and mentions are removed to the term ALITHIS;

 

[90]        GRANTS the service of this order for an interlocutory injunction outside the regular legal hours of service and by means of letter box delivery, by electronic mail, or by fax, should the Defendants' places of business in Montreal or in Québec City be closed;

 

[91]        DISPENSES the Plaintiff from furnishing any security for costs or damages;

 

[92]        SUSPENDS the execution of this judgment until noon on Friday, April 19, 2013;

 

[93]        ALL WITH COSTS.

		(S) MARK G. PEACOCK, J.S.C. __________________________________
Me. Alexandra Steele Me David Chapdelaine Miller
ROBIC, S.E.N.C.R.L.
Attorneys for Plaintiff Solutions Abilis Inc.
Me. François Guay Me. Ekaterina Tsimberis
SMART & BIGGAR
Attorneys for Defendants Groupe Alithis Inc. and Alithis Services-Conseils Inc.
Date of hearing:	February 27, 2013