On February 14, 2025, the Federal Court (per Fuhrer J.) found that Joanna Habbous, owner of the registered trademark PHYSIOHEALTH STUDIOS, had established infringement, passing off, and depreciation of goodwill against Arc Physio Health Ltd. The application was, however, dismissed against the named personal Respondents.
Habbous v. Arc Physio Health Ltd., 2025 FC 297
Background
Ms. Habbous (the “Applicant”) is a registered physiotherapist, owner and clinic director of Physiohealth Studios. The Applicant opened Physiohealth Studios in downtown Toronto in 2011 and has remained successfully in operation ever since. In 2013, the Applicant applied to register the trademark PHYSIOHEALTH STUDIOS, which was granted in 2015 and assigned No. TMA914954 (“954 Registration”).
In the case at bar, the Applicant applied for relief from trademark infringement, passing off, and depreciation of goodwill against three Respondents (collectively, the “Respondents”). The primary Respondent was a corporate entity that adopted the name PHYSIO HEALTH in 2019 (the “Corporate Respondent”), but in 2023, changed it to ARC PHYSIO HEALTH following the receipt of cease and desist correspondence from the Applicant. The individual Respondents (“Individual Respondents”) were Krystyna Wilk, the sole director and officer of Arc Physio Health Ltd., and Christine Stevenson, the clinic director and registered physiotherapist. The Respondents conceded the validity of 954 Registration.
Issues
The Court addressed the following issues:
A. Whether the Respondents’ use of PHYSIO HEALTH and ARC PHYSIO HEALTH infringed the 954 Registration under sections 19 and 20 of the Trademarks Act, RSC 1985, c T-13 (“TMA”);
B. Whether passing off was established under paragraph 7(b) of the TMA;
C. Whether there was likely depreciation of goodwill under section 22 of the TMA; and
D. Whether the Individual Respondents were personally liable.
Analysis
A. Establishment of infringement under the TMA
Section 19
Section 19 of the TMA grants exclusive rights to use a registered trademark across Canada for listed goods and services. To establish an infringement claim, the impugned trademark must be identical to the registered one. The Court found that the Respondents did not use a trademark identical to “PHYSIOHEALTH STUDIOS, so the Applicant’s claim under section 19 was dismissed.
Section 20
Section 20(1)(a) deems infringement if someone sells, distributes, or advertises goods or services using a confusing trademark or trade name. The factors to be considered in assessing confusion in light of “all the surrounding circumstances” are outlined in subsection 6(5) of the TMA.
In assessing the “degree of resemblance” factor, prescribed in paragraph 6(5)(e) of the TMA, the Court favoured the Applicant in finding a strong resemblance between “PHYSIOHEALTH STUDIOS” and “PHYSIO HEALTH”, and found that the dominant element “PHYSIOHEALTH” led to confusion among consumers. Although the Court noted that “ARC PHYSIO HEALTH” had less resemblance to the registered mark, the presence of “ARC” in the building’s name and other businesses in the same location made consumers focus on “PHYSIO HEALTH,” causing confusion on a balance of probabilities. The Court rejected the Respondents’ argument that “Arc” stands for “achieve, restore and connect,” due to a lack of evidence, and held that “Arc” was likely adopted due to the clinic’s location in the “Arc” building in Erin Mills.
The “Inherent distinctiveness, extent known, and length of time in use” factor, found in paragraph 6(5)(a) of the TMA, also favoured the Applicant. The Court found that “PHYSIOHEALTH STUDIOS” had three descriptive components. Despite being descriptive, “PHYSIOHEALTH STUDIOS” was found to have become distinctive through long-term use, significant business activity, and the generation of substantial revenue. The Court held that distinctiveness of a mark was a question of fact, and the mere fact that a word is descriptive does not necessarily prevent it from being distinctive. The Court noted that long-term use gives a mark more weight, which led it to favour the Applicant’s mark over the Respondents’ newer “PHYSIO HEALTH” and “ARC PHYSIO HEALTH” marks.
The Court also considered the factors prescribed in paragraphs 6(5)(c) and 6(5)(d) of the TMA, i.e., “nature of the parties’ goods, services, or business” and “nature of the trade,” and found no significant differences. The Court held that both clinics target the same consumers in the same geographical area, increasing the risk of confusion.
In its assessment of any “other surrounding circumstances,” the Court found no significant period of coexistence between the businesses, in part due to significant hindrance of the growth of both businesses due to the COVID-19 pandemic. The Respondents also failed to show that use of other business names by third parties affected the likelihood of confusion between “PHYSIOHEALTH STUDIOS” and the Respondents’ marks.
B. Passing off was established
The Court found that the essential elements for a passing off claim, i.e., ownership of goodwill, misrepresentation to the public, and resultant damage, were all met. The Applicant had proven ownership of the trademark “PHYSIOHEALTH STUDIOS” through the 954 Registration, and the Respondents had also conceded its validity. The Applicant also demonstrated that its trademark had acquired significant goodwill through sustained use, which the Respondents’ confusing marks had undermined. Despite differences in design elements and channels of trade, both clinics targeted the same consumers in the same geographical area, leading to a likelihood of confusion. The Applicant’s loss of control over her trademark due to the Respondents’ confusing marks satisfied the damage element of the passing off test.
C. Depreciation of Goodwill was established
The Court found that the Respondents’ use of confusing marks likely depreciated the goodwill of “PHYSIOHEALTH STUDIOS,” contrary to section 22 of the TMA. The Court observed that there was no requirement to show that Applicant’s trademark was well-known, and that it was sufficient to show that trademark’s distinctiveness and long-term use were significant. The Court disagreed with the Respondents’ claim that consumers would not mentally connect the marks at issue, noting evidence from online searches where all marks were listed contemporaneously. Ultimately, the Court determined that the Respondents’ marks undermined the goodwill and control of the Applicant’s trademark.
D. Personal Liability was not established
Despite robust findings on infringement and passing off, the Court found insufficient evidence to hold the Individual Respondents personally liable. Personal liability in intellectual property infringement requires deliberate, willful conduct beyond ordinary business activities, for which there was no evidence. The Court emphasized that simply making decisions that lead to infringement was not enough to establish personal liability.
Relief and Costs
The Court granted relief to the Applicant against the Corporate Respondent only, finding that trademark infringement, passing off, and depreciation of goodwill associated with PHYSIOHEALTH STUDIOS had all been established. A permanent injunction was issued to restrain further infringement, along with orders for the delivery-up or destruction of infringing materials and the transfer of associated domain names. Compensatory damages of $15,000 and lump sum costs of $10,500 were awarded to the Applicant, but no punitive damages were granted due to a lack of evidence of malicious conduct.
Conclusion
This decision reinforces the principles surrounding trademark infringement, passing off, and the protection of goodwill, particularly when common descriptive terms become distinctive through extended use and business activity.