This was a motion for summary trial in a passing off and expungement case between competitors in the mobile video game market. The Court (per Fuhrer J.) held that summary trial was an appropriate vehicle for deciding the Plaintiff’s claims for passing off and expungement of the Defendant’s registration – and that those claims were not established on the evidentiary record.
Enigmatus, S.R.O. v. Playtika LTD et al, 2024 FC 751
The Plaintiff, Enigmatus S.R.O. (“Enigmatus”) is an online and mobile video game developer that has used SLOTOPOLY as an unregistered trademark in Canada since 2010. The Defendant, Playtika Ltd. (“Playtika”), is a developer of online and mobile games that has used SLOTOMANIA as a registered trademark in Canada since 2011.
In 2016, the Plaintiff sued Playtika and its marketing partners (“Defendants”) for passing off and to expunge the trademark registration for SLOTOMANIA. The Defendants counterclaimed for trademark infringement, passing off and depreciation of goodwill.
On December 1, 2022, the Defendants filed a motion for summary trial. The motion was supported by evidence from an inhouse IP director, a private investigator, a reference librarian, a trademark searcher, a legal assistant, and a sociolinguistic expert who opined on the degree of resemblance between the SLOTOPOLY and SLOTOMANIA trademarks. The Plainfiff filed its responding record on March 10, 2023 comprising evidence from two corporate executives, a lawyer, and three witnesses with expertise in technical software product and data analysis, digital marketing and online advertising, and linguistics.
The motion for summary trial was heard on June 27-29, 2023 and taken under reserve. The Court delivered its judgment and reasons on June 6, 2024.
Is Summary Trial Appropriate?
The Court held that “summary trial is appropriate where the issues are well defined, the facts necessary to resolve the issues are already in evidence, credibility issues can be resolved, and the questions of law can be dealt with as they could be after a full trial.” In such cases, the Court may grant judgment, either generally or on an issue, unless it would be unjust to do so.
The Court found it “hard to imagine what other evidence the parties would assemble, apart from live testimony” if a full trial were to be held, and was “not persuaded that … the added expense and delay of fact finding at trial is necessary to a fair process and just adjudication”. There was sufficient evidence before the Court to “find the necessary facts and apply the relevant legal principles to resolve the dispute.” Proceeding by way of summary trial was therefore deemed appropriate.
Who has the Burden of Proof on a Summary Trial?
The Court noted that there is a “competing” line of Federal Court cases pertaining to the burden of proof on a motion for summary trial that requires clarification by the Court of Appeal. However, the Court held in the meantime that on such a motion, each party is required to put its best foot forward and lead relevant evidence to support its asserted positions. In this particular action, the Plaintiff must establish the essential elements of its claim, including passing off and the invalidity of the SLOTOMANIA registration, while the Defendants have the burden to prove any affirmative defences. The Court must determine the legal consequences that flow from the established facts.
Did the Plaintiff Prove its Claim for Passing Off?
The three essential elements of a passing off claim are: (1) the existence of goodwill or reputation attached to a plaintiff’s goods or services, (2) a misrepresentation to the public by the defendant resulting in deception, and (3) damage or likely damage suffered by the plaintiff.
The Court held that the Plaintiff failed to meet its burden to establish passing off for two reasons: (a) there was insufficient evidence of goodwill associated with the SLOTOPOLY mark; and (b) there was insufficient evidence of confusion between its mark and the Defendants’ SLOTOMANIA mark. This was sufficient to dispose of the Plaintiff’s passing off action.
On the issue of confusion, the Court held that there was no “likelihood of confusion” between the two trademarks as of December 2010 (first use of Defendants’ SLOTOMANIA mark) for two reasons: (a) there was a lack of goodwill or reputation in the Defendants’ mark (one of the section 6(5) factors); and (b) the parties’ trademarks had coexisted in the same market for twelve years without any evidence of actual confusion. This was not dispositive of whether there was a “likelihood of confusion”, but it “weigh[ed] in the balance” against the Plaintiff. The Court did not consider the Defendants’ alleged damages in view of this finding.
The Court gave little to no weight to evidence based on hearsay because the Rules require that affidavits on a motion for summary judgment or trial must be based on personal knowledge. The Court also held that the evidence given by linguistic experts was “unnecessary and distracts from the primary focus of the test for confusion”, namely, the “first impression of a casual consumer in a hurry.”
Did the Plaintiffs Prove that the Defendants’ Registration Should be Expunged?
The Court held that there was no merit to the Plaintiff’s claim for the expungement of the SLOTOMANIA registration under the Trademarks Act for the following reasons: (a) the statutory presumption of validity; (b) the absence of any likelihood of confusion; (c) the absence of actual confusion; and (d) the failure to plead material facts in the statement of claim on a timely basis. Moreover, the validity of the Defendant’s trademark registration was also a complete defence to the Plaintiff’s passing off action.
Should the Counterclaim be Granted?
The Court dismissed the Defendants’ counterclaim based upon the absence of confusion between the two marks.
Costs
The Court awarded costs of $507,460.62 to the Defendants, comprising twenty-five percent of their actual legal fees and one hundred percent of their disbursements. Costs associated with the Defendants’ sociolinguistic expert on the degree of resemblance between the SLOTOPOLY and SLOTOMANIA trademarks were not recoverable.
Appeal
The Plaintiff filed an appeal to the Federal Court of Appeal on June 14, 2024.