We have all seen what can happen when a particular business idea takes off; before long, a proliferation of new businesses pop up in the same neighbourhood, and it can often be difficult to distinguish one taco joint (or craft brewery, nail bar, fair trade coffee house, yoga studio, etc.) from another.
This exact legal scenario is unfolding in the West Queen West neighbourhood of Toronto, where a cocktail supply emporium feels that its newfound success is being usurped by its neighbour – who was there first!
In a rather unusual intellectual property lawsuit recently filed in Ontario Court, Ms. Kristen Voisey of BYOB is alleging that the neighbouring Organic Boutique is attempting to “pass off” its goods and services as those of Voisey’s business. Interestingly, Organic Boutique was operating in its space on the same stretch of Queen St. W in Toronto long before the arrival of BYOB.
You can read the Toronto Star’s take on the matter here.
Passing off is typically used when defending common law (i.e. unregistered) trademark rights. As you may recall from my previous blog post Do I Really Have to Register My Trademark?, trademark rights arise automatically when a brand is used in connection with a business; however, there are a host of benefits that arise when a trademark is officially registered with the Canadian government. A passing off claim can be brought in either Provincial Court under common law or Federal Court pursuant to s. 7 of the Trade-marks Act.
Generally speaking, making a successful claim for passing off will establish that:
- A first party has acquired goodwill (i.e. a reputation amongst its customers) in its goods or services;
- A second party has deceived the public through misrepresentation; and
- The first party will experience actual or potential harm as a result of this misrepresentation.
However, in this case it appears that trademark rights are not necessarily at the heart of the matter. BYOB sells vintage glassware, cocktail bitters and bartenders’ tools, while the Organic Boutique is more of a specialty food shop. Nevertheless, BYOB alleges that Organic Boutique has slowly adapted its business to mirror that of BYOB by selling competing products and changing the store décor to reflect its successful neighbour.
Further, BYOB alleges that its potential customers have actually been confused into thinking that the two businesses are the same or, in the very least, related.
It is difficult to discuss the merits of a case at such an early stage and with minimal factual information. Accordingly, the author will refrain from any assessments of either party’s position in this matter. It is safe to say that any party suing for passing off faces an uphill battle in demonstrating the requisite goodwill or reputation has been acquired.
Regardless of the outcome, this case certainly will be of particular importance in establishing the boundaries of what intangible property rights can be considered protectable in an Ontario business.
If you have a question about passing off or about your trademark rights, contact our Intellectual Property Group.