BLAW4820 Business Law: An In-Depth Case Comment on Nissan v. BMW

This case comment analyzes Nissan Canada Inc. v. BMW Canada Inc., a trademark dispute concerning the use of the letter 'M' in advertising. The Federal Court of Appeal addressed whether Nissan's use of 'M' infringed on BMW's unregistered trademarks. The court emphasized that for advertising to constitute 'use' of a trademark, it must occur during the transfer of goods. BMW's claim under section 7(b) of the Trademarks Act failed because it did not establish valid and enforceable trademark rights for 'M' and 'M6' at the time of transfer or possession, nor did they demonstrate actual damages. The court clarified that section 4(1) of the Trademarks Act applies to unregistered trademarks, requiring proof of 'use' in association with goods. The analysis concludes that while proving damages can be presumed after establishing initial criteria for passing off, it doesn't negate the need to establish potential damages during the liability phase. The appeal was allowed, highlighting the importance of demonstrating trademark use during the transfer of property or possession of goods for a successful passing off claim.

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Case Comment: NISSAN CANADA INC. V. BMW CANADA INC., 2007 FCA 255
In this case, it was stated by the Federal Court of Appeal that in order to establish a mark in
advertisement and other promotional material to be adequately associated with the goods to
constitute use, such advertisements and other promotional material should have been given at the
time of the transfer of property or the possession of the goods in question. It was also stated by
the court. In this case it was stated that a bifurcation order is not going to relieve the plaintiff
from the need for establishing the presence of damages as the element of cause of action in
recourse to passing off.
In the present case, the respondents were BMW owner tried to prevent the Appellant Nissan,
from the display of the letter M. Alone in the advertisements that were related with luxury
automobiles. And, BMW had specifically filed an action on 12 August, 2005 for preventing
Nissan from selling, distributing or advertising the automobiles of on with their parts and
accessories in association with the trademark M and M6. In this case, BMW had relied on
sections 7(b), 20 and 22, Trademarks Act. It was claimed by BMW that the company had been
using trademarks M and M6 in Canada since at least 1987.
In this regard, it needs to be noted that the letter M and combination M6 had not been registered
as a trademarks of BMW in Canada, but application for registration has been filed after these
proceedings were initiated. On the other hand, BMW has registered trademarks for M and
design.

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BMW had been using M brand as its premium brand. This regard, M stands for "motorsport" and
the racing heritage of the company. In case of the M series of auto mobiles, technologies have
been used visual originality developed for the racing cars of BMW. As a result, the company
targeted high-end market segments and also commanded a higher price sales. Therefore in the
opinion of BMW, these special vehicles were known among the public and for being referred to
as M cars not only within the company but also in the market as a result of the sales and
promotional activities of BMW related with these vehicles.
The M6 car, which was also referred to as the M edition of BMWs 6 series was the first M. Car
that has been sold and promoted by BMW in Canada. Later on, it was followed by the series M3,
and M5. Therefore the M cars of the company were marked with M and design mark, but they
were not marked with a standalone M letter mark.
As compared to this situation, Nissan was a licensee of registered trademarks M35 and M45.
That was being used for some of the vehicles falling under the luxury division of the company,
Infinity. The auto mobiles journalists usually refer to these cars as the M cars or the Infinity M
cars but they were not marked with a standalone later M or with any of the trademarks that have
been claimed by BMW. In some advertisement campaigns, that took place in 2005 and 2006, the
letter M, had been displayed by Nissan with great emphasis for the purpose of promoting the
new editions of Infinity M models of Nissan. Within the company, M6 description was used for
designating an optional sports package which provided a manual six speed transmission. This
was available to the buyers of Infinity G35. When the M6 package was introduced by Nissan,
BMW was not selling the M6 cars in Canada, but it had plans for reintroducing the model in
2006.

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Decision by the Court of Appeal: It was held by the Court of Appeal that the trial judge had
made an error in law. By pursuing a paragraph 7(b) analysis without establishing first that M and
M6 marks were valid and they can be enforced as trademarks in view of the fact that there was
no "evidence related with the use on which the trial judge could have relied upon for arriving at
the conclusion that M and M6 marks can be considered as unregistered trademarks falling under
the meaning of section 2.
While doing so, the court insisted on the significance for the plaintiff to establish the possession
of a valid and enforceable trademark (registered or registered) for the purpose of using paragraph
7(b) as the cause of action (Kirkbi AG v. Ritvik Holdings Inc., 2003). In this case, it was
revealed by the evidence that M and M6 trademarks were not used on the goods of BMW and
similarly they were not use on the packages in which the goods were distributed. Therefore, the
Federal Court of Appeal applied the rules in section 4(1) related with the use as it applies to
wares (Clairol International Corp. et al. v. Thomas Supply & Equipment Co. Ltd. et al., 1968). It
has been mentioned in this provision that "a trademark is used in association with goods if, while
transferring property or in possession of the wares, a normal course of trade, the mark is present
on the wares on the packages in which the wares are distributed or if it is present in any other
manner associated with the wares that the notice of association is given to the person to whom
the property of possession is going to be transferred".
Regarding the letter M, alone, it was displayed by BMW in its advertisements and promotional
materials but it was stated by the court that evidence was not present regarding when the
advertising material has been distributed in Canada. Therefore the court stated that this was not
sufficient to qualify as "use" and as a result, the advertising material displaying the Mark has

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been given at the time of the transfer of property or possession of the related wares. In support of
decision the court relied on its earlier decisions (Clairol International Corp. et al. v. Thomas
Supply & Equipment Co. Ltd. et al. (1968), 55 C.P.R.176 at 190). Apart from it, the court also
arrived at the decision that actual or potential damage to BMW, which is the essential element
for establishing liability under paragraph 7(b) had not been established. Therefore in the opinion
of the Court, the trial court erred when it assumed that there were going to be damages and in
considering that a bifurcation order was capable of reliving BMW from of establishing, in
portion to the trial dealing with liability issues, the presence of real or potential damages as the
element required for the cause of action.
Therefore, in this case it was confirmed that section 4(1) is applicable in case of unregistered
trademarks concerning the matter of statutory passing off that takes place in accordance with
section 7(b). The meaning of this situation was that "use" needs to be established and the case
law dealing with section 4(1) is going to be applicable. The issue regarding when there is an
association that is adequate enough or satisfy the requirement of section 4(1) still needs to be
decided on the basis of the facts of each case (Marc-Aurele v. Ducharme, 1976). If the issue
related to the use of unregistered trademark results in a potential problem, the litigants are always
required to consider that common law passing off should be included as an additional cause of
action. Regarding the issue of damages, it is difficult to comprehend the racing adopted by the
court in view of the long list of cases in which it has been provided that where the first two
criteria for passing out has been established, the presence of damages can be presumed. However
this should not be confused with the real establishment of quantum of damages, as in this case it
was to be decided post judgment (Ragdoll Productions (UK) Ltd. v. Jane Doe (T.D.), 2002).

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It needs to be noted that in the present case, the appeal made by BMW Canada has been allowed
up to passing off is established by use. It is required that the use should take place "at the time of
transfer of property or possession" of the wares. In the present case, BMW failed to establish the
use of marks "M" and "M6" at the time of transfer because there was no evidence to establish
that "M" or "M6" had been marked on the goods of the company or the packages in which these
goods were distributed. Moreover, the marks M and M6 were not associated with the goods of
BMW in such a way that the notice of association would be given to the person to whom the
property or possession to be transferred. Under the circumstances, it was concluded by the court
of appeal in this case that in absence of satisfactory proof regarding use, BMW cannot be
successful in its action.

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References
BMW Canada Inc. v. Nissan Canada Inc., 2007 FC 262
Clairol International Corp. et al. v. Thomas Supply & Equipment Co. Ltd. et al. (1968), 55
C.P.R. 176
Kirkbi AG v. Ritvik Holdings Inc., 2003 FCA 297
Marc-Aurele v. Ducharme (1976), 34 C.P.R. (2d) 155
Ragdoll Productions (UK) Ltd. v. Jane Doe (T.D.), 2002 FCT 918