Court File and Parties
COURT FILE NO.: CV-21-00668594-0000
DATE: 20220210
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 2788610 Ontario Inc., Plaintiff/Moving Party
AND:
Hemant Bhagwani, Fatima Bhagwani, 1727799 Ontario Inc. and Bombay Frankie Inc., Defendants/Responding Parties
BEFORE: C.J. Brown J.
COUNSEL: Alan Dick, for the Plaintiff/Moving Party
Pathik Baxi, for the Defendants/Responding Parties
HEARD: January 28, 2022
ENDORSEMENT
[1] The plaintiff, 2788610 Ontario Inc., seeks an order for an interlocutory injunction prohibiting the defendants, Hemant Bhagwani (“the individual defendant”), Fatima Bhagwani, 1727799 Ontario Inc. and Bombay Frankie Inc., from using the term “Bombay Frankie” as the name of any restaurant or franchising business it owns, operates or controls, and from using the term as the name of any social media account or website. The plaintiff maintains that it does not seek to shut down the defendants’ business, as the defendants would still be able to use any of the nine names they have used or are using at their other Indian restaurants. They only seek to prevent use of the name “Bombay Frankie” for restaurants owned and operated by the defendants.
[2] The uncontroverted evidence indicates that the term “frankie” refers to a common street food in India, which has been in use since the 1930s, and denotes a wrap that can be filled with many things.
[3] On October 30, 2020, the plaintiff was incorporated. On that day, it filed an application to register the trademark “Bombay Frankies”. Since that day, it has invested time, money and creative energy in opening a system of franchised Indian restaurants bearing that name, and 8 negotiations are currently ongoing. The plaintiff hopes to open six restaurants under that name in 2022.
[4] To date, no restaurants have been opened by the plaintiff in the name of Bombay Frankies.
[5] On June 10, 2021, the plaintiff incorporated “Eat Up Canada Inc.” (“EUC”) to be the franchisor of the system. When the trademark is registered, it will be the exclusive licensee and will provide sublicenses to franchisees. All things necessary to launch the franchise system were undertaken. An experienced Indian chef has been retained to develop a menu with the theme “chef inspired Indian street food”. A branding company, Rodnell & Co. Inc., has been retained to develop the “Bombay Frankies” brand. Franchise lawyers have been retained to draft the template franchise agreement, a franchise disclosure document and other ancillary franchising documents required for the plaintiff’s franchising.
[6] In February 2021, the defendant began using the name “Bombay Frankie” and incorporated one restaurant under that name on March 10, 2021. That restaurant was opened for business in July of 2021. A second restaurant was incorporated and opened thereafter on October 27, 2021. Both restaurants are operated through the defendant companies, 1727799 Ontario Inc. and Bombay Frankie Inc., incorporated under the laws of Ontario. The defendant applied for registration of a trademark in that name on March 15, 2021.
[7] The individual defendant had, prior to 2021, created several Indian restaurants, including Amaya, The Indian Room, Marathi, Indian Street Food Co., Sindi Street Food, The Fat Beet, Leela Indian Food Bar, The Kolkata Club, Good Karma and Bom-Bay Snack Bar. He also used the term “frankie”, Mumbai Frankie rolls, Bombay frankie, Chicken Frankie, Rajma Frankie and veg frankie in menus he developed for his catering business. The individual defendant also owns and operates the domain name www.bombay-frankie.com, and operates social media accounts using the Bombay Frankie name.
[8] Most of those names indicated above are not used as a business name but rather identify a product or food in a menu.
[9] The plaintiff maintains that, pursuant to the Trademark Act, it filed for a proposed trademark first and therefore has priority over another person who files an application subsequent to the first applicant’s filing. It states that a trademark will be registrable when it is intended to be used but not yet in use. The plaintiff maintains that prior to its application for registration, the defendants did not use the name “Bombay Frankies” as a tradename, and therefore cannot take objection to the application on the basis of prior use.
[10] The plaintiff states that pursuant to section 16(1) and (2) of the Trademark Act, an applicant who properly files an application has a right to have a trademark registered, except in certain circumstances, on certain grounds of objection, which, it maintains, are not applicable here. It states that the only basis on which registration could be objected to and rejected is if the defendants had previously used or made known the trademark.
[11] The evidence before this Court suggests that the individual defendant had or should have had, directly or indirectly, notice or deemed notice of the plaintiff’s application for registration of the trademark “Bombay Frankies” prior to opening his restaurant under the similar name. The plaintiff further alleges that the defendant had trademark searches undertaken, including a Nuans search, which shows the plaintiff’s application for a trademark for “Bombay Frankie’s”, such that the defendants had knowledge of the application. The defendants deny that the individual defendant had any knowledge of the plaintiff’s application. The plaintiff maintains that the individual defendant, Mr. Bhagwani, ultimately, in cross-examination, admitted to knowledge of the searches, and the results thereof.
[12] The defendants maintain that the plaintiff has no more than a trademark application that has not been examined, approved, advertised for opposition or allowed by the Canadian Trademarks Office. The defendants therefore maintain that the plaintiff has no priority in the trademark. They further maintain that the plaintiff has not used the trademark in the public forum, and thus has no goodwill or reputation with respect to the name, and there cannot be said to be any confusion to the general public regarding the name. The evidence indicates that the landlords with whom the plaintiff has spoken regarding his franchise restaurants have expressed concern about the confusing name used by the defendants.
The Law
[13] In order to obtain an interlocutory injunction, the moving party must satisfy the tripartite RJR MacDonald test, namely:
that there is a serious issue to be tried;
that the applicant will suffer irreparable harm if the injunction is not granted; and
that the balance of convenience favours the applicant.
RJR MacDonald Inc. v Canada (Atty. Gen.) 1994 117 (SCC), [1994] S. C. J. No. 17, [1994] 1S. C. R. 311 (S. C. C.)
[14] The RJR MacDonald test does not apply when the court is deciding whether to grant permanent injunctive relief. It is designed to address situations in which the court does not have the ability to finally determine the merits of the case but, nonetheless, must decide whether interim relief is necessary to protect the applicant’s interests.
Analysis
Is There a Serious Issue to Be Tried
[15] In order to establish the first branch of the RJR MacDonald test, it is generally accepted in Canada that it must be established that there is a serious issue to be tried. The threshold for “serious issue” is a low one. A novel claim may also constitute a serious issue to be tried: Tolko Industries Ltd. v Okanagan Indian Band, 2010 BCSC 24 at para. 47.
[16] The plaintiff states that the applicant was the first to apply to register the trademark and none of the grounds of the objection to said trademark listed in section 38(2) applies, such that the only basis on which registration of the applicant’s trademark could be rejected would be if the defendants could establish that the trademark had been “previously used”, in this case before October 30, 2020 when the plaintiff applied for registration, or the defendants had “made known” the trademark. It is the position of the plaintiff that prior to October 30, 2020, the defendants had not used or made known the trademark within the meaning of the Trademark Act.
[17] While the defendants state that they have years of prior use of “similar trademarks”, the evidence before this Court does not establish that they have years of prior use of “Bombay Frankie”. The uses made by the defendants are set forth at paragraph 7, supra. There was no use made of “Bombay Frankie” in relation to a restaurant, but only in relation to menu foods and, as indicated at paragraph 7, above, there was no consistency in the use of the term “frankie” and certainly no consistency with reference to the term “Bombay Frankie”.
[18] The plaintiff maintains that an applicant cannot secure registration of a trademark if, on the date the application is made, there is an application pending for a “confusing trademark”, and refers to section 16(2) of the Trademark Act. The defendants filed their application to register the confusing trademark “Bombay Frankie” on March 15, 2021, at which time, the application for the trademark “Bombay Frankies” was already pending. As such, the second trademark would not have been registered. Thus, the plaintiff maintains that only it has the right to secure registration of the trademark.
[19] It appears that the individual defendant, Hemant Bhagwani, did not file a notice of change for his appointment as Director of Bombay’s Frankie Roll Inc. until September 27, 2021, after the litigation was commenced.
[20] Further, the individual defendant seeking to register the trademark, and basing priority on prior use, namely, Hemant Bhagwani, is not the same person who incorporated the company; the plaintiff maintains that the two must be the same.
[21] The plaintiff submits that a novel issue is raised by the amendments to the Trademark Act, namely: whether the claim crystallizes when the applicant gains a right to secure registration (the application date) or when registration is in fact secured (the registration date). It is the plaintiff’s submission that these claims crystallize on the application date. This is disputed by the defendants, who maintain that the claims crystallize on the registration date.
[22] The plaintiff further submits that there are arguable claims for trademark infringement and passing off raised in this action.
[23] I am satisfied based on all the evidence and submissions before me that there is a serious issue to be tried. The first branch of the RJR MacDonald test has been satisfied.
Will the Plaintiff Suffer Irreparable Harm If the Injunction Is Not Granted
[24] Irreparable refers to the nature of the harm suffered rather than its magnitude. It is harm that either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Harm to the respondent if the injunction is granted should only be considered at the third stage of the test, namely balance of convenience.
[25] The plaintiff states that the defendants’ use of the name, Bombay Frankie, has caused confusion. The plaintiff states that during negotiations with respect to leases, landlords have questioned whether the plaintiff is affiliated with the term Bombay Frankie, have expressed concern at this confusion and are hesitating to lease space to the plaintiff as a result. They submit that this will also affect any goodwill developed by them and that the potential exists to have any such goodwill appropriated by the defendants.
[26] The plaintiff maintains that the confusion is slowing their entry into the market, and that the longer it takes for the plaintiff to enter the market, the more the defendants will unfairly appropriate the plaintiff’s first mover advantage. Further, the longer the defendants are able to use the confusing trademark, the stronger will be the association between the parties in the mind of the public. Once that happens, the plaintiff maintains that it will be unable to develop goodwill in the trademark. I note that goodwill, as defined by the Supreme Court of Canada “… connotes the positive association that attracts customers towards its owner’s wares or services rather than those of its competitors”: Veuve Cliquot Ponsardin v Boutiques Cliquot Ltee. Thirdly, the plaintiff maintains that these factors are impossible to quantify in the absence of existing sales to use as a comparator: Reckitt Benckiser LLC v Jamieson Laboratories Ltd. 2015 FC 215, affd 2015 FCA 104 [paras. 15-17, 22, 52, 54; 68].
[27] The defendant alleges it will suffer irreparable harm as it already has two restaurants opened under the name Bombay Frankie. I note that both of these restaurants were opened after the plaintiff made application for registration of its trademark. One restaurant has been open for 10 months and one for three months The individual defendant further submits that the plaintiff will not suffer irreparable harm if the injunction is not granted as they have no reputation or goodwill in the trademark due to the lack of use. I do note that the concept of use or prior use is no longer required pursuant to the amendments to the Trademark Act. The defendant further maintains that the plaintiff will not suffer irreparable harm if no injunction is granted which cannot be compensated monetarily as the plaintiff has not, as yet, used the trademark and has generated no goodwill associated with the trademark.
[28] I do note that harm to the defendants should only be considered at the third branch of the RJR MacDonald test.
[29] I accept the plaintiff’s argument that until the priority issues are finally determined, the defendant would have a significant advantage in terms of name recognition, goodwill and first mover advantage were his two Bombay Frankie restaurants, both opened after the plaintiff had applied for registration of the Trademark, Bombay Frankies, permitted to continue in business under the name Bombay Frankie.
[30] I am of the view that the plaintiff will suffer undue disadvantage given the present circumstances, and will suffer irreparable harm which is not compensable monetarily. The plaintiff has applied for registration, and has put considerable work into planning and developing its concept for the launch of its franchise restaurants, including retaining lawyers for trademark, franchising, leasing and a firm for branding and marketing, as well as working with a chef on developing menus. Thus, I find that the second branch of the RJR MacDonald test has been satisfied.
Balance of Convenience
[31] The factors which must be considered in assessing the balance of convenience are numerous and will vary in each individual case. The question to be determined is to which party will the order cause the least harm.
[32] The plaintiff maintains that it seeks only a limited remedy, and does not seek to shut down the infringing restaurants or any of the other restaurants owned by the individual defendant. It does not seek to prevent the defendants from selling the food item known as a “frankie” or even calling the food item a “frankie”. It only seeks to prevent the defendants from using the confusing trademark, “Bombay Frankie”, as the name of the two infringing restaurants. The nine other restaurants of the individual defendant are not affected, as they do not use the name “Bombay Frankie”. Indeed, the plaintiff observed that the defendants could use any of the nine other names for the two restaurants now bearing the name “Bombay Frankie”. Further, the defendants would have to change the domain name of their website and take down the social media references.
[33] Because they have nine other restaurants, the majority of their goodwill would be attached to those other restaurants. The plaintiff maintains that the defendant has not established that it used the confusing trademark, Bombay Frankie, prior to the application date, or only used the term with one person as the subject line of an email with a recipe for the food item.
[34] I do recognize that there will be some inconvenience to the defendants. However, until the trademark issue is finally determined, one party should not have an advantage over the other developing a reputation and goodwill under the confusing trademark. Based on all of the evidence and submissions before me, I find that, in all of the circumstances of this case, the balance of convenience is in favour of the plaintiff. Thus, the third branch of the RJR MacDonald test has been satisfied.
[35] Each party has accused the other of discreditable conduct and not coming to the court with clean hands, with respect to this equitable relief. I have heard and reviewed all of the evidence of both parties. I am of the view that both engaged in some questionable conduct. The parties seemed equally matched in this regard. However, I do not, on that basis, find adverse inferences as against either party, as was urged by each of the parties against the other, in their submissions before me, or a reason to dismiss this motion for coming to court with unclean hands.
Undertaking as to Damages
[36] The plaintiff has provided an undertaking as to damages. If the injunction is granted and it is subsequently determined that it ought not to have been granted, the plaintiff will pay damages to the defendants, which it maintains will be easily quantifiable.
[37] In conclusion, I grant the interlocutory injunction,
restraining the defendants from using the term “Bombay Frankie”, as the name of any restaurant or franchising business it owns, operates, controls, may own, may operate, may control;
ordering the defendants to cease using www.bombay-frankie.com; and
ordering the defendants to cease using the term “Bombay Frankie” as the name of their social media accounts,
until the application has been heard on its merits or until further order of the court.
Costs
[38] I would strongly urge the parties to agree between themselves as to the costs of this motion. In the event that they are unable to do so, they will each provide me with their submissions as to costs, comprising a maximum of 3 pages, including their Bills of Costs, within 60 days.
C.J. Brown J.
Date: February 10, 2022