Canadian Council of Blue Cross Plans, Ontario
Hospital Association, Associated Hospitals of
Alberta, Quebec Hospital Service Association and
Maritime Hospital Service Association (Plaintiffs)
v.
Blue Cross Beauty Products Inc. and Regent
Industries Limited (Defendants)
Trial Division, Collier J.—Ottawa, November 1
and 25, 1971.
Trade marks—Infringement—Blue Cross registered trade
mark for medical care—Use by defendants for cosmetics—
Whether infringement, passing -off, or improper business
usage—Trade Marks Act, R.S.C. 1970 c. T-10, secs. 7(b)
and (e), 19, 20, 22(1).
Plaintiffs were the registered owners and users since
1954 and 1956 under the Trade Marks Act of the words
"Blue Cross" and a blue-coloured cross in respect to hospi
talization and prepaid medical care including prescription
drugs. Defendants sold cosmetics since 1952 using labels
containing the words "Blue Cross" and a blue-coloured
cross. Defendants sold their cosmetic primarily to discount
department stores, some of which had prescription drug
counters, which honoured plaintiffs' plans in respect of
prescription drugs.
Held, dismissing plaintiffs' action,
1. Defendants did not violate section 7(b) or section 20
of the Trade Marks Act. Their use of the trade marks would
not be likely to cause the average person to infer that
plaintiffs were in the business of selling cosmetics as well as
providing hospitalization and medical care.
2. Defendants did not violate section 7(e) of the Act.
There was no evidence of any business or commercial usage
which had been contravened. Eldon Industries Inc. v. Relia
ble Toy Co. (1966) 54 D.L.R. (2d) 97; Clairol International
Corp. v. Thomas Supply & Equipment Co. [1968] 2 Ex.C.R.
552, applied.
3. Defendants did not violate section 19 of the Act.
Plaintiffs had no exclusive right to the trade marks in
respect to cosmetics.
4. Defendants did not violate section 22(1) of the Act.
Their use of the blue cross would not likely depreciate the
value of goodwill attached to that trade mark. Clairol Inter
national Corp. v. Thomas Supply & Equipment Co., supra,
applied.
ACTION.
M. Fleming, Q.C. for plaintiffs.
S. Godinsky, Q.C. and R. Uditsky for
defendants.
COLLIER J.—In this action, the plaintiffs
claim relief against the defendants in respect to
the alleged infringement of certain trade marks.
In the pleadings and in argument, the plain
tiffs relied on a number of sections of the Trade
Marks Act, S.C. 1952-53, c. 49, (now R.S.C.
1970, c. T-10), particularly sections 6, 7, 19, 20
and 22. In addition, the plaintiffs contend the
defendants to be liable at common law and
under the Act for passing off certain wares.
The plaintiff, Ontario Hospital Association
(hereafter "Ontario") was incorporated in 1941.
It is a non-profit organization and its members
comprise all public hospitals, a large number of
mental hospitals, private hospitals and nursing
associations. It has a Division, known as the
Blue Cross Division. This Division has since
1941 operated plans, available to the public, for
prepaid hospital care and other allied services.
Since the entry of governments into the field of
schemes to cover hospital and other medical
fees incurred by the public, the Blue Cross
Division now provides coverage to their sub
scribers (in return for a premium) in respect to
semi-private wards in a hospital, extended
health care, prescription drugs, dental care, and
certain other matters referred to in the evi
dence. The Blue Cross Division is non-profit
making as is the Association itself.
The plaintiff Associated Hospitals of Alberta
(hereafter "Alberta") is a similar organization to
the plaintiff Ontario, and also has a Blue Cross
Division, which now sells to subscribers cover-
ages not provided by governments, similar to
those which the Ontario Blue Cross Division
provides.
The plaintiffs Quebec Hospital Service Asso
ciation (hereafter "Quebec") and Maritime Hos
pital Service Association (hereafter "Mari-
time") have been in operation since 1943 and
1944 respectively. Quebec and Maritime do not
have the same connections with hospitals as do
Ontario and Alberta, but operate primarily as
Blue Cross organizations, selling to their sub
scribers various coverages (with some excep
tions) as previously outlined.
The evidence is uncontradicted that these
four plaintiffs have a great number of subscrib
ers, have a large volume of business in terms
of dollars, and spend considerable amounts of
money in advertising their services.
The plaintiff Canadian Council of Blue Cross
Plans (hereafter "the Canadian Council") was
incorporated in 1951 primarily to coordinate the
Blue Cross schemes. Its members are the other
four plaintiffs.
I might add here that Saskatchewan never
had a Blue Cross plan. In Manitoba, there were
at one time Blue Cross Services available and
the Manitoba organization was at one time a
member of the Canadian Council. In British
Columbia, Blue Cross services were available
until the introduction of hospital insurance but
the British Columbia Blue Cross organization
was never a member of the Canadian Council.
Prior to 1954, the plaintiffs used the name
Blue Cross and a symbol (a blue cross) in
respect to the services they provided. Neither
the name, nor the symbol had been registered
under the Unfair Competition Act, S.C. 1932,
c. 38, because that Act did not provide for
registration of trade marks in respect to
services.
Following the passage of the present statute
which provides for registration of trade marks
in respect to services, the Canadian Council, on
November 5, 1954, obtained registration as
owner of the trade mark "Blue Cross" (the
words) and a symbol (a cross coloured blue).
The registration numbers are 100,000 and 100,-
001 and in each case the marks are registered in
respect to services described as (1) hospitaliza
tion, (2) contracts for prepaid hospital care.
The plaintiffs Ontario, Alberta, Quebec and
Maritime were in 1956 registered as registered
users of these two trade marks. Since then, all
the plaintiffs have continued using the words
"Blue Cross" and the symbol or representation
of a blue cross, usually the words and symbol
appearing together in some combination, but
not always. (In Exhibit 5, the annual report for
the plaintiff Quebec, the words "Blue Cross"
do not anywhere appear; a blue cross symbol
only is shown on several of the pages).
The defendant Blue Cross Beauty Products,
Inc. (hereafter "Beauty") is a California corpo
ration engaged in the manufacture and sale of
certain wares: "low end" cosmetic products
exclusively for use in respect to fingernails.
These products retail for under one dollar each.
The words "Blue Cross" were registered in
the United States Patent Office in 1949 in
respect to liquid cuticle remover and Beauty at
some later stage became the registered owner of
that trade mark. Beauty sold its products across
the United States, and in 1952 started selling to
an outlet (Pratt's Beauty Supplies) in Vancou-
ver, B.C. Pratt's sold across western Canada,
but the volume of business was low. In 1966
the defendant Regent Industries Limited, a
Quebec company (hereafter "Regent"), became
Beauty's Canadian distributor, although some
sales were made to the Vancouver outlet up to
1969, when the proprietor there retired.
The total sales to the Vancouver outlet were
approximately $11,000, made up of just under
100,000 individual items. In fact only two cos
metic products were sold in that area and the
actual products were entered as exhibits:
(1) Cuticle Remover. The label on the small
bottle has printed at the top in blue the words
"Blue Cross" (in a kind of script) with a small
blue-coloured cross between the two words.
The cross is fairly similar in appearance to the
blue coloured cross which appears on much of
the literature published by the plaintiffs. Near
the bottom of the label are the words "Blue
Cross Beauty Products". On the face of the
display card to which the bottle is fastened are
the words "Blue Cross" in white, with a small
blue cross between the two words. On the back
of the card there is the same combination of
words and symbol as appears on the label on
the bottle, except the words and symbol are
larger. Further down on the back of the card is
the name of the defendant Beauty.
(2) Nailife. This is a bottle containing nail
conditioner. The label on the bottle has essen
tially the same words and the same symbol as in
the case of the Cuticle Remover. The card to
which the bottle is attached is in its material
parts the same as the card described above,
except the words "Blue Cross" on the face are
in blue.
The evidence is that these two products were,
in all material respects, identical to those han
dled by Regent when it commenced selling them
in Ontario and Quebec in 1966. The chief dif
ference was the addition of the defendant
Regent's name on the back of the card.
Commencing in 1966 or 1967 one other prod
uct complained of by the plaintiffs was dis
tributed by Regent: a bottle called "Seal ±
Cote". The so-called cross between the words
"Blue Cross" on the label is similar to a plus
mark used in adding, and is yellow in colour. At
the bottom of the label are the words (again in
yellow) "Blue ± Cross Beauty Products, Los
Angeles, California. At the bottom of the face
of the display card to . which the bottle is
attached are the words in red "Another Blue ±
Cross Nail Beauty Aid". The back of the dis
play card is similar to that found on "Cuticle
Remover" and "Nailife".
The plaintiffs' complaint is, according to their
counsel, not directed at the use by the defend
ants of the words "Blue Cross", but at the use
of the blue-coloured symbol, particularly where
the appearance of the cross closely resembles
that shown on the defendants' wares. I can
understand this qualification because there is a
considerable amount of evidence before me of
the use by other persons and corporations for
some time of the words "Blue Cross" in associ
ation with other services and wares.
I conclude from a number of exhibits that the
words "Blue Cross" have been used by others
in association with animal hospitals or clinics in
various cities in Canada (services), and in asso
ciation with wares: shoes, salmon, furniture,
household disinfectant spray, and industrial
adhesive tapes. In the case of the wares
referred to, registered trade marks "Blue
Cross" have been obtained. In one case in
respect to services, the words have been
accompanied by a blue cross (exhibit 62).
In respect to the use of a blue cross symbol
on wares, the defendants produced a number of
exhibits indicating the use of such a symbol by
persons or companies other than themselves or
the plaintiffs:
Exhibits 52, 53: Blue Cross industrial adhe
sive tapes, the labels also including a form of
blue cross.
Exhibits 54, 55, 56: Blue Cross shoes, includ
ing a cross very similar to that used by the
plaintiffs.
Exhibits 51, 81, 82: First aid kits with large
blue crosses very similar to those used by the
plaintiffs with the word "Curity" printed
inside one cross (exhibit 81) but not on the
other (exhibit 82).
The sales by Beauty to Regent of the three
products to the date of trial were approximately
$17,500 comprising approximately 128,400
items.
I should say at this point the weight of the
evidence indicates the wares sold by the
defendants in Ontario were primarily to dis
count stores including the "department store"
type drug store, many of which did not have
prescription drug counters, although some did.
The evidence also indicates the wares in ques
tion were usually displayed in the area where
other types of cosmetic products were
displayed.
It appears to me the real attack by the plain
tiffs is based on their entry into the field of
providing plans for subscribers in respect to
payment for prescription drugs. The plaintiffs
say the defendants' wares are displayed and
sold in business establishments which honour
Blue Cross plans in respect to payment for
prescription drugs and the general public or
Blue Cross subscribers might draw the infer
ence that the plaintiffs (non-profit organiza
tions) were in the profit-making business of
manufacturing or selling fingernail cosmetics.
According to the evidence the plaintiffs did
not offer prescription drug plans until 1961 in
the Province of Ontario, and at later dates in the
Provinces of Alberta, Quebec, and the Mari-
times. The defendant Beauty had, however,
since 1952, sold "Cuticle Remover" and "Nai-
life" in Western Canada, although the plaintiffs,
according to Mr. Cannon, were unaware of this.
The plaintiffs, particularly in paragraph 18(b)
of their statement of claim, rely on section 7(b)
of the Trade Marks Act, R.S.C. 1970, c. T-10,
which reads:
7. No person shall
(b) direct public attention to his wares, services or busi
ness in such a way as to cause or be likely to cause
confusion in Canada, at the time he commenced so to
direct attention to them, between his wares, services or
business and the wares, services or business of another;
Although the word "confusion" is not defined
in the Act, section 6' of the Act may be proper
ly used as some guide in determining its mean
ing (See Canadian Converters' Co. v. Eastport
Trading Co. Ltd. [1969] 1 Ex.C.R. 493 at 498;
The Carling Breweries (B.C.) Ltd. v. Tartan
Brewing Ltd. [1969] 1 Ex.C.R. 500 at 502,
reversed on appeal without reference to this
point [1970] S.C.R. 323; Old Dutch Foods Ltd.
v. W. H. Malkin Ltd. [1969] 2 Ex.C.R. 316 at
323-324), and the plaintiffs seem to have para
phrased the wording of this section in their
allegation in paragraph 18(a) of the statement of
claim where they say the defendants have
18. (a) sold, distributed and advertised wares in associa
tion with trade marks and a trade name, namely, "Blue
Cross", "a blue-coloured cross symbol" and "Blue Cross
Beauty Products Limited", respectively, in Canada, in a
manner as would be likely to lead to the inference that such
wares were manufactured or sold, by or on behalf of, the
plaintiffs or one of them, or that the business carried on
under such trade name was carried on by the plaintiffs or
one of them.
In my view, on the evidence in this case, the
defendants did not direct public attention to
their wares in such a way as to cause or be
likely to cause confusion in the sense that their
use of the words "Blue Cross", and particularly
the use of a blue coloured cross symbol (which
on some portions of Exhibits 32, 26, and 35
"Cuticle Remover", "Nailife", and "Seal ±
Cote" is quite similar to the symbol used by the
plaintiffs) would be likely to lead to the infer
ence that these wares were wares sold or manu
factured by the plaintiffs, or associated in some
way with the business of the plaintiff.
I have no doubt the plaintiffs' Blue Cross
services are quite well known, but viewing the
matter in a realistic and commercial way, I do
not think the average person would be likely to
infer that the organization which provides cov
erage and service in respect to various types of
medical expenses which one might incur, was in
the business of selling cosmetic products as
well. The plaintiffs provide services and the
defendants sell wares, and while this does not
mean there cannot be confusion within section
7(b), I think it is one of the surrounding circum
stances to be considered. Here the parties are
not even remotely in a similar field of activity.
The question of confusion is a question of
fact, and, on the evidence before me, I conclude
the average person associates the plaintiffs'
symbol with specialized services, and would not
likely be confused on seeing and imperfectly
remembering the exact details of the defend
ants' wares.
The plaintiffs rely also on section 7(e) of the
Act which reads:
7. No person shall
(e) do any other act or adopt any other business practice
contrary to honest industrial or commercial usage in
Canada.
This appears to me to be a somewhat broad
section, but it has been held this section must
be read in conjunction with the other para
graphs in section 7. (Eldon Industries Inc. v.
Reliable Toy Co. Ltd. (1966) 54 D.L.R. (2d) 97;
Clairol International Corporation v. Thomas
Supply & Equipment Co. [1968] 2 Ex.C.R.
552.)
In the Eldon case, Schroeder J.A. pointed out
there must be proof of a business or commer
cial usage, either by actual evidence or in some
cases by judicial notice, which has been con
travened. There is no such proof in this case.
In the Clairol case, Thurlow J. referred to the
Eldon case and went on to say that the acts or
business practices committed by a defendant
must be dishonest or in some way deceptive or
calculated to deceive. Again, there is no such
evidence in this case, nor in my view, any
evidence from which such an inference could
be drawn.
In argument plaintiffs' counsel relied on sec
tion 10 of the Act. The plaintiffs did not raise
this section in their pleadings, but I do not think
a plaintiff should or is required to plead a
matter of law. All that is required under the
Rules of this Court is a precise statement of the
material facts on which a party relies (Rule
408(1)). In my opinion, the plaintiffs neither
pleaded nor proved any material facts to bring
themselves within section 10.
The plaintiffs also rely on sections 19, 20 and
22(1) of the Act.
19. Subject to sections 21, 31 and 67, the registration of a
trade mark in respect of any wares or services, unless
shown to be invalid, gives to the owner the exclusive right
to the use throughout Canada of such trade mark in respect
of such wares or services.
20. The right of the owner of a registered trade mark to
its exclusive use shall be deemed to be infringed by a
person not entitled to its use under this Act who sells,
distributes or advertises wares or services in association
with a confusing trade mark or trade name, but no registra
tion of a trade mark prevents a person from making
(a) any bona fide use of his personal name as a trade
name, or
(b) any bona fide use, other than as a trade mark,
(i) of the geographical name of his place of business, or
(ii) of any accurate description of the character or
quality of his wares or services,
in such a manner as is not likely to have the effect of
depreciating the value of the goodwill attaching to the trade
mark.
22. (1) No person shall use a trade mark registered by
another person in a manner likely to have the effect of
depreciating the value of the goodwill attaching thereto.
Section 19 of the Act gives the plaintiffs the
exclusive right to use throughout Canada their
trade marks, but only in respect to the services
of hospitalization and contracts for prepaid hos
pital care. The plaintiffs do not have any exclu
sive right in respect to cosmetic products. (See:
Bonus Foods Ltd. v. Essex Packers Ltd. [1965]
1 Ex.C.R. 735 at page 743.)
The next question is whether on the facts
here there has been a "deemed" infringement
within section 20. This goes back to the prob
lem whether the defendants' use of the symbol
is "confusing". Section 20 must be read with
section 6. I come to the same result as before
when dealing with section 7(b). In my view, the
symbols used by the defendants are not likely
to lead to the inference that the plaintiffs' ser
vices and the defendants' wares emanate from
the same source.
Finally, I come to the claim under section
22(1). Assuming the defendants have in fact
"used" the plaintiffs' trade mark, the blue cross
symbol, I again am of the opinion that that use
would not likely have the effect of depreciating
the value of whatever goodwill attaches to that
trade mark. The plaintiffs are not in business to
make profits. Mr. Fleming, counsel for the
plaintiffs, candidly stated in opening that there
was no evidence of direct damage or loss, but
contended the plaintiffs' goodwill was
depreciated because the inference would arise
that the plaintiffs were now in a profit-making
line of business.
Section 22(1) has been considered by Thur-
low J. in the Clairol case previously referred to.
In that case the defendants, in marketing hair
colouring products, used brochures and pack
ages containing colour comparison charts of
competing hair colouring products. The plain
tiffs' products in the brochures were identified
by their own registered trade marks. Thurlow J.
found the defendants to be in violation of sec
tion 22 and held that the value of the goodwill
attaching to the plaintiffs' trade marks had been
depreciated. I quote from the judgment at pages
573 and 575:
... Then what is meant by "depreciate the value" of such
goodwill. To my mind this means simply to reduce in some
way the advantage of the reputation and connection to
which I have just referred, to take away the whole or some
portion of the custom otherwise to be expected and to make
it less extensive and thus less advantageous. As I see it
goodwill has value only to the extent of the advantage of
the reputation and connection which its owner enjoys and
whatever reduces that advantage reduces the value of it.
Depreciation of that value in my opinion occurs whether it
arises through reduction of the esteem in which the mark
itself is held or through the direct persuasion and enticing of
customers who could otherwise be expected to buy or
continue to buy goods bearing the trade mark. It does not,
however, as I see it, arise, as submitted by Mr. Henderson,
from danger of loss of exclusive rights as a result of use by
others as this in my view represents possible loss of exclu
sive rights in the trade mark itself rather than reduction of
the goodwill attaching to it.
But he may not put his competitor's trade mark on his
goods for that purpose or for the purpose of carrying a
message to customers who are familiar with the goods
identified by the trade mark in order to facilitate their
purchase of his own goods and thus to reduce the chance
that new customers hearing of the goods identified by the
mark would buy them in preference to his or that old
customers familiar with the goods identified by the trade
mark would have continued buying the goods of the owner
of the mark. In short he may not use his competitor's trade
mark for the purpose of appealing to his competitor's cus
tomers in his effort to weaken their habit of buying what
they have bought before or the likelihood that they would
buy his competitor's goods or whatever binds them to his
competitor's goods so as to secure the custom for himself,
for this is not only calculated to depreciate and destroy his
competitor's goodwill but is using his competitor's trade
mark to accomplish his purpose.
In this case the contest is between services
and wares in unrelated fields of business activi
ty. There is no evidence of actual depreciation
of goodwill nor, in my mind, any evidence from
which an inference of likelihood of depreciation
can be drawn.
The action is dismissed with costs.
1 6. (1) For the purposes of this Act a trade mark or trade
name is confusing with another trade mark or trade name if
the use of such first mentioned trade mark or trade name
would cause confusion with such last mentioned trade mark
or trade name in the manner and circumstances described in
this section.
(2) The use of a trade mark causes confusion with
another trade mark if the use of both trade marks in the
same area would be likely to lead to the inference that the
wares or services associated with such trade marks are
manufactured, sold, leased, hired or performed by the same
person, whether or not such wares or services are of the
same general class.
(3) The use of a trade mark causes confusion with a trade
name if the use of both the trade mark and trade name in
the same area would be likely to lead to the inference that
the wares or services associated with the trade mark and
those associated with the business carried on under such
trade name are manufactured, sold, leased, hired or per
formed by the same person, whether or not such wares or
services are of the same general class.
(4) The use of a trade name causes confusion with a trade
mark if the use of both the trade name and the trade mark in
the same area would be likely to lead to the inference that
the wares or services associated with the business carried
on under such trade name and those associated with such
trade mark are manufactured, sold, leased, hired or per
formed by the same person, whether or not such wares or
services are of the same general class.
(5) In determining whether trade marks or trade names
are confusing, the court or the Registrar, as the case may
be, shall have regard to all the surrounding circumstances
including
(a) the inherent distinctiveness of the trade marks or
trade names and the extent to which they have become
known;
(b) the length of time the trade marks or trade names
have been in use;
(c) the nature of the wares, services or business;
(d) the nature of the trade; and
(e) the degree of resemblance between the trade marks or
trade names in appearance or sound or in the ideas
suggested by them.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.