(Disponible uniquement en anglais)
Horne A.J.
David S. Lipkus of Lipkus Law LLP for the Plaintiffs
Aiyaz Alibhai and Benjamin Pearson of Miller Thomson LLP for the Defendant
Toyota Jidosha Kabushiki Kaisha (Toyota Motor Corporation) v Marrand Auto Inc., 2024 FC 1776
November 7, 2024
This decision concerned a motion to strike by the Defendant. The underlying context for the Defendant’s motion was a dispute over the Defendant’s act of importing and distributing genuine Toyota parts despite not being part of the Plaintiffs’ authorized dealership network.
The Plaintiffs argued that by failing to disclose that it was not an authorized dealer, the Defendant’s conduct amounted to making false and misleading representations contrary to ss 52 and 74.01(1) of the Competition Act. According to the Plaintiffs, only parts sold by authorized dealers will come with a warranty and compliance with the Plaintiffs’ shipping and handling standards. Since the Defendant cannot provide these same warranties, the Plaintiffs argued that consumers would be misled as to the condition of the resold goods. However, the Court did not agree, holding that there is no duty to disclose and that failure to alert consumers of a material fact does not amount to a breach of s 52. The Court also held that breaches of s 74.01 can only be pursued by the Commissioner of Competition. Given these findings, the Court struck out all claims based on the Competition Act without leave to amend.
With respect to the Trademarks Act, the Plaintiffs argued that the Defendant’s conduct amounted to passing-off contrary to ss 7(b) and 7(c), and depreciation of goodwill contrary to s 22.
Regarding s 7(b), the Defendant argued that “use” of a trademark is required for infringement to be found, and that mere reselling of genuine parts cannot constitute such “use.” The Court disagreed and held that it is “at least arguable that ‘use’ of a trademark is not required to establish infringement.” On this point, the Court reasoned that consumers may still be misled as to the quality of the resold goods if the goods were damaged and not covered by the warranty that would apply to Toyota parts sold by authorized dealers. The Court therefore struck this claim but with leave to amend.
Regarding s 7(c), the Court struck the claim without leave to amend since that section requires a substitution of goods originating from one source with goods originating from a different source. The Court found that no such substitution existed in this case as the Defendant was reselling genuine parts that were actually manufactured by the Plaintiffs.
Finally, with respect to s 22, the Court held that it is at least arguable that the reselling of genuine parts may still depreciate the goodwill associated with the Plaintiffs’ trademark if the resold goods were damaged and not covered by the Plaintiffs’ warranty. The Court therefore struck this claim, but with leave to amend.
Prepared by Eric Li, Borden Ladner Gervais LLP