ENERGIZER BRANDS, LLC v. ENERGIZER CANADA INC., 2023 FC 804

Date: 20230706 Docket: T-1591-15 Citation: 2023 FC 804 Ottawa, Ontario, July 6, 2023 PRESENT: The Honourable Justice Fuhrer BETWEEN: ENERGIZER BRANDS, LLC AND ENERGIZER CANADA INC. Plaintiffs and THE GILLETTE COMPANY, DURACELL CANADA, INC., DURACELL U.S. OPERATIONS, INC., AND PROCTER & GAMBLE INC. Defendants JUDGMENT AND REASONS (Public Version with Redactions of Confidential Version Issued June 7, 2023) Table of Contents Page I. Overview 3 II. Factual Background 4 III. Parties’ Expert Witnesses 12

(1) Energizer’s Experts 12 (

a) Dr. Joanne McNeish 12 (

b) Dr. William A. Adams 12 (

c) A. Scott Davidson 13

(2) Duracell’s Experts 13 (

a) Dr. Ceren Kolsarici 13 (

b) Dr. Jay Whitacre 14 (

c) Andrew C. Harington 14 IV. Parties’ Fact Witnesses 15

(1) Energizer’s Fact Witnesses 15

(2) Duracell’s Fact Witnesses 16 V. Procedural History, including Duracell’s Motion for

Summary Judgment 18 VI. Trial Issues 21 VII. Analysis 22 Preliminary Issue: Energizer’s Objections to Expert Evidence 22

(1) Dr. Kolsarici 22

(2) Dr. Whitacre 27

(3) Andrew Harington 29 A. Depreciation of Goodwill? 31

(1) Legal Principles 31

(2) Marketing Concepts 35

(3) Analysis 45

(

a) ENERGIZER and ENERGIZER MAX 45 (b) " “the bunny brand” " 51 (c) " “the next leading competitive brand” " 55 B. False or Misleading Statements or Descriptions? 58

(1) Subsection 7(

a) of TMA - false or misleading statement 59

(2) Subsection 7(

d) of TMA - false description in material respect 59 (3) Subsection 52(1) of Competition Act - false or misleading in material respect 60

(4) Analysis 65 (

a) Energizer HA Sticker 65 (

b) Bunny Brand HA Sticker, Energizer MAX AA Sticker, and Next Leading Competitive Brand AA Sticker 71 C. Activities Permitted by Agreement? 81 D. Remedies? 84 VIII. Conclusion 95 IX. Confidentiality 96 X. Costs 96 Annex " “A” " – Applicable Legislative Provisions 99 Annex " “B” " –

Summary of Dr. Whitacre’s Analysis of Comparative AA Testing – Duracell Tests* 104 I. Overview [ 1 ] This is a case about comparative advertising.

In determining a case like this, the Court often is tasked with considering whether the challenged activity depreciates goodwill and unfairly trades on a claimant’s reputation through a competitor’s false or misleading statements about the claimant or their products, or whether the activity is permissible competition that does not violate the claimant’s intellectual property rights. [ 2 ] I have considered carefully the documentary evidence produced by the parties, the testimony of their witnesses, and their submissions.

As noted by the Defendants’ counsel during closing submissions, " “Nobody’s been shy to present anything to this Court.” " [ 3 ] Having worked my way through the sizable record before the Court, I find that the Defendants’ use of the Plaintiffs’ registered trademarks ENERGIZER and ENERGIZER MAX in comparative advertising on packaging labels or stickers for the very products listed in the registrations contravenes

section 22 of the Trademarks Act . I therefore allow the action, in part, on the terms described below. [ 4 ] Otherwise, I determine that in the circumstances underlying this dispute, the Defendants’ other comparative ads are not likely to depreciate goodwill, nor do any of the ads in issue make false or misleading statements contrary to the Trademarks Act and the Competition Act . I thus dismiss the remainder of the action. II. Factual Background [ 5 ] The Plaintiffs [Energizer] and Defendants [Duracell] represent the leading battery brands in Canada and are each other’s biggest competitors.

Together, they supply more than two-thirds of the household consumer battery market in Canada. Duracell has the largest market share, while Energizer has the next largest market share. [ 6 ] Energizer is the owner of the following registered Canadian trademarks: Trademark Registration Number and Date Goods ENERGIZER TMA157162 June 7, 1968 Electric dry cell batteries for use in electronic, hearing, lighting and horological devices for operation of small electric motors ENERGIZER TMA740338 May 19, 2009 General purpose batteries

ENERGIZER MAX TMA580557 May 2, 2003 Batteries (RABBIT & Design) TMA399312 June 19, 1992 Batteries (ENERGIZER BUNNY & Design) TMA943350 July 14, 2016 General purpose batteries; general purpose battery chargers Trademark Registration Number and Date Goods [Energizer Trademarks] [ 7 ] The Energizer Bunny is an iconic " “spokes-character.” " It is a well-known, if not famous, trademark. [ 8 ] Energizer Brands, LLC and, previously, Eveready Battery Company, Inc., licensed Energizer Canada Inc. to use the Energizer Trademarks in Canada, including from 2014 to 2017. [ 9 ] Duracell is the owner of the registered Canadian trademark DURACELL, registration number TMA153333 dated September 22, 1967, for electric batteries and fuel cells. [ 10 ] Between 2010 and the present, Energizer and Duracell, including their respective predecessors, have supplied AA batteries and hearing aid [HA] batteries in sizes 10, 13 and 312, to retailers in Canada such as Walmart, Costco and Shoppers Drug Mart. [ 11 ] Energizer complains about the following statements the Defendants have displayed on stickers affixed to packaging for certain DURACELL batteries sold in Canada [Sticker Campaign]; representative examples of the stickers also are reproduced below, along with representative examples of the packaging on which the stickers were used: (a) 15% LONGER LASTING vs.

Energizer on size 10, 13, 312. 15% PLUS DURABLES vs les piles Energizer de format 10, 13 et 312. [Energizer HA Sticker]

(

b) Up To 20% LONGER LASTING vs. the bunny brand on sizes 10, 13 & 312. Durent jusqu’à 20% PLUS LONGTEMPS vs les piles 10, 13 et 312 de la marque du lapin. [Bunny Brand HA Sticker] (

c) UP TO 15% LONGER LASTING vs. ENERGIZER MAX* *AA size. Results vary by device and usage patterns.

[Energizer MAX AA Sticker] (

d) up to 15% longer lasting vs. the next leading competitive brand* *Next leading alkaline based on Nielsen sales data. AA size. Results vary by device and usage patterns. durent jusqu’à 15% plus longtemps que les piles de l’autre marque concurrente la plus populaire* *L’autre pile alcaline AA la plus populaire selon les données sur les ventes de Nielsen. Les résultats varient selon le type d’appareil et la fréquence d’utilisation. [Next Leading Competitive Brand AA Sticker]

[collectively, At Issue Stickers] [ 12 ] The following is a photo of a representative in-store display of batteries, including DURACELL batteries and ENERGIZER batteries: [ 13 ] The top row of batteries in the above photo appears to show the Bunny Brand HA Sticker on the third DURACELL package from the left. [ 14 ] In some stores, there are separate displays for ENERGIZER batteries and for DURACELL batteries. The following are photos of these kinds of displays:

[ 15 ] Further, some stores sell only DURACELL batteries, while others sell only ENERGIZER batteries. [ 16 ] Duracell admits that they have sold DURACELL batteries in Canada with packaging bearing labels or stickers that contain the words " “the bunny brand” " or " “the next leading competitive brand” " alongside other text.

None of Duracell’s packaging, stickers or point-of-sale displays bears both phrases " “the bunny brand” " and " “the next leading competitive brand” " (or their French equivalents). [ 17 ] The evidence points to Duracell having displayed the At Issue Stickers on packaging for AA alkaline batteries, containing 6, 8, 10, 16, 20 or 24 batteries, and for HA batteries in sizes 10, 13 or 312, containing 8, 12 or 24 batteries [collectively, At Issue AA Batteries, At Issue HA Batteries, At Issue Batteries or At Issue Packaging, as the case may be], during the approximate period August 2014 to August 2017, with different start and end dates depending on the sticker.

III. Parties’ Expert Witnesses [ 18 ] The parties adduced expert evidence, in the form of reports and testimony, in accordance with Rules 52.1 , 52.2 , and 52.4 of the Federal Courts Rules , SOR/98-106 [ FCR ]. The expertise for which they were qualified at trial is summarized briefly below. [ 19 ] See Annex " “A” " to these Reasons for applicable legislative provisions.

(1) Energizer’s Experts [ 20 ] The Plaintiffs rely on the evidence of the following experts: (

a) Dr. Joanne E. McNeish; (

b) Dr. William A. Adams; and (

c) A. Scott Davidson, including Mr. Davidson’s reply expert evidence. (

a) Dr. Joanne McNeish [ 21 ] Dr. McNeish is an Associate Professor, Marketing at the Ted Rogers School of Management at (then) Ryerson University. She was qualified as an expert in the area of marketing and marketing research, branding and brand equity, consumer behaviour, perception and decision making and consumers’ reaction to paper-based objects and the impact of marketing activities. Dr. McNeish testified on the impact of the At Issue Stickers on consumer purchasing decisions, brand equity and loyalty, and the goodwill attached to Energizer’s brand. (

b) Dr. William A. Adams [ 22 ] Dr. Adams is a physical chemist with a PhD in physical chemistry, having worked in the battery field since 1977. He was qualified as an expert in the area of electrochemistry and in the design, development, research and testing of batteries, including comparative battery testing and battery technology in various applications, including the analysis of battery testing data. He provided testimony regarding testing of the At Issue Batteries in the context of the claims on the At Issue Stickers. (

c) A. Scott Davidson [ 23 ] Mr. Davidson is a chartered professional accountant and a chartered business valuator with Kroll Canada Limited. He was qualified as an expert in accounting, business valuation, and financial loss and damage quantification, including the assessment of losses and accounting of profits in commercial and intellectual property disputes, including in relation to trademarks. Mr. Davidson testified about Duracell’s profits, Energizer’s damages and other figures related to Duracell’s use of the At Issue Stickers. His testimony was based on an initial expert report and a reply report to Mr. Harington’s initial expert report.

(2) Duracell’s Experts [ 24 ] The Defendants rely on the evidence of the following experts: (

a) Dr. Ceren Kolsarici; (

b) Dr. Jay F. Whitacre; and (

c) Andrew C. Harington, including Mr. Harington’s sur-reply report. (

a) Dr. Ceren Kolsarici [ 25 ] Dr. Kolsarici is the Director of the Scotiabank Centre for Customer Analytics and an associate professor of marketing and analytics at Queen’s University. She was qualified as an expert in marketing and advertising, including consumer behaviour and marketing analytics. Dr. Kolsarici’s expert evidence was provided in response, and as a contrast, to Dr. McNeish’s approach to considering the context of the consumer experience and decision making when purchasing batteries in a retail setting. (

b) Dr. Jay Whitacre [ 26 ] Dr. Whitacre is the Director of the Wilton E. Scott Institute for Energy Innovation at Carnegie Mellon University in Pittsburgh, Pennsylvania. He obtained his masters and PhD in materials science and engineering from the University of Michigan. He was a post-doctoral scholar at the California Institute of Technology and worked at the Jet Propulsion Lab and at NASA. Dr. Whitacre was qualified as an expert in the design and construction of batteries, and battery testing and performance, including comparative battery performance. His evidence was provided in response to Dr. Adams’ evidence. (

c) Andrew C. Harington [ 27 ] Mr. Harington is a chartered accountant, chartered business valuator and chartered financial analyst with The Brattle Group. He was qualified as having expertise in investigative and forensic accounting, business valuation and damage and loss of profit quantification in commercial and intellectual property disputes. Mr. Harington’s testimony was based on an initial expert report and a sur-reply report to Mr. Davidson’s reply report. IV. Parties’ Fact Witnesses [ 28 ] Below is a

summary of the parties’ fact witnesses and an overview of the evidence they provided.

(1) Energizer’s Fact Witnesses [ 29 ] Jeffrey Roth is the Global Category Leader Battery Division at Energizer. He testified regarding: (

a) the Energizer corporate organization and trademark licencing; (

b) competition in the marketplace for household batteries; and (

c) the use of Energizer trademarks in Canada, including promotion and advertising. [ 30 ] Joshua Showers is the Global Director for Quality and Supplier Development for Energizer Holdings.

He testified regarding the constructions of Energizer batteries sold in Canada as Energizer Max AA batteries, and Energizer’s testing of batteries in accordance with the ANSI and IEC standards. (These are standards set respectively by the American National Standards Institute’s American National Standards Committee, and the International Electrochemical Commission’s Technical Committee.) [ 31 ] Daniel Durbin is a Director of Batteries Research and Development at Energizer.

He testified regarding Energizer’s testing of batteries to provide technical support to corporate customers, retail partners and device designers, overlapping battery testing summaries, and statistical methods and thresholds for substantiating product claims. [ 32 ] With the Court’s permission during trial, David Colin Decker, a PhD candidate at the University of Toronto in the Department of Statistical Sciences, testified regarding the merged data sets compiled from Duracell’s testing of AA batteries and HA batteries relied on by Drs.

Adams and Whitacre, and the histograms he prepared using Duracell’s testing data. [ 33 ] Ryan Sedlak is Vice President, Global Finance Business Partnering at Energizer Holdings and spoke about Energizer’s financial records, as well as related information pertaining to how Energizer accounts for sales and costs. [ 34 ] Kelley Vacca is Senior Director of Global Business Intelligence at Energizer Holdings and testified about data from Nielsen and other compilers of marketplace data.

She explained that Nielsen data was an estimate of the market based on data from retailer checkouts, to which Nielsen made adjustments to account for retailers that do not provide data, in order to predict the entire market. [ 35 ] Kim Ly and Marta Wysokinski provided evidence by way of affidavits that were taken as read-in, with the agreement of the Court and the parties. Their evidence confirmed that packages of Duracell HA batteries with the words " “vs. the bunny brand” " remained available for sale at retailers in Canada in July 2017, and even as recently as January 2020.

(2) Duracell’s Fact Witnesses [ 36 ] Cecile Lach Hui is the Group Director, Corporate Finance at Procter & Gamble Canada Inc. [P&G], and has worked with P&G since 1992 in various roles. P&G previously owned Duracell before Berkshire Hathaway acquired Duracell in 2016. Ms. Lach Hui testified about Duracell’s accounting records up to February 2016, and testified that the volume of Duracell’s sales were tracked either as a number of packages, a number of batteries, or a number of displays or crates. [ 37 ] Aric Tai is the Senior Finance Manager at Duracell U.S. Operations Inc., a position he has held since July 2020. He testified about

Duracell’s accounting records after March 2016, and that the volume of Duracell’s sales were tracked either as a number of packages, a number of batteries, or a number of displays. He also stated that different retailers may order by package or by case, but there was no rule in terms of customers using a specific metric; it was dependent on how Duracell set up each brand code. [ 38 ] Ramon Velutini is the Global Chief Marketing Officer Duracell U.S. Operations Inc. and President of Duracell Latin America. He was the Senior Brand Manager for Duracell North America from 2014 to 2016.

He testified about Duracell’s marketing campaign involving the At Issue Stickers. [ 39 ] Raymond Iveson is the Senior Vice-President and Senior Research Fellow, Research & Development at Duracell U.S. Operations. He joined Duracell in 2014 and assumed his current role in December 2021. He testified about Duracell’s internal battery testing. [ 40 ] Bradley (or Brad) Elliott is North America Packaging Development, Quality Assurance Director Duracell U.S. Operations, a position he has held since 2020, having been working for that company since 1984 .

He testified about how Duracell tracks packages, including packages shipped to Canada. [ 41 ] During the trial, the Court permitted Andrew Harington to provide fact evidence regarding his agglomeration of data, or preparation of a merged data set, on which Dr. Kolsarici relied in her Difference in Difference [DID] analysis, as discussed in greater detail below in the Analysis

section under the heading " “Preliminary Issue: Energizer’s Objections to Expert Evidence.” " V. Procedural History, including Duracell’s Motion for

Summary Judgment [ 42 ] The following is a

summary of the procedural history leading to the trial of this matter. [ 43 ] Energizer filed their Statement of Claim on September 21, 2015, claiming that Duracell’s packaging and point-of-sale display materials used the Energizer Trademarks in a manner that was likely to have the effect of depreciating the value of the goodwill attached to the trademarks, contrary to subsection 22(1) of the Trademarks Act, RSC 1985, c T-13 [ TMA ] . Energizer later filed an Amended Statement of Claim on December 11, 2015 and a Second Amended Statement of Claim on October 18, 2016.

The latter amended pleading claimed: Duracell’s packaging and point-of-sale display materials made false or misleading statements tending to discredit Energizer’s batteries contrary to paragraph 7 (

a) of the TMA ; were materially false and likely to mislead the public as to the character, quality and performance of Energizer’s batteries contrary to paragraph 7 (

d) of the TMA ; and that Duracell had knowingly or recklessly made representations that were false and misleading in a material respect, contrary to subsection 52(1) of the Competition Act, RSC, 1985, c C-34 [ Competition Act ]. Energizer sought an accounting of profits for breach of subsection 52(1) of the Competition Act . [ 44 ] Duracell’s Amended Statement of Defence denied Energizer’s claims and requested that the action be dismissed with costs on a solicitor and client basis. [ 45 ] On February 14, 2018, Duracell brought a motion for

summary judgment to dismiss certain allegations in Energizer’s Second Amended Statement of Claim. Specifically, Duracell sought to dismiss Energizer’s claims that Duracell used the terms " “the next leading competitive brand” " and " “the bunny brand” " and their equivalent phrases in French on labels attached to packages of Duracell’s batteries contrary to paragraphs 7 (

a) and (

d) and subsection 22(1) of the TMA . Duracell also sought to dismiss Energizer’s claim for an accounting of profits under subsection 52(1) of the Competition Act . [ 46 ] Justice Brown granted the Duracell’s

summary judgment motion in part: Energizer Brands, LLC v The Gillette Company , 2018 FC 1003 [ Energizer FC 2018 ]. He concluded that use of the term " “the bunny brand” " on Duracell’s battery packaging could offend subsection 22(1) of the TMA , having regard to the Supreme Court of Canada’s decision in Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée , 2006 SCC 23 [ Veuve Clicquot ] , and also could offend paragraphs 7 (

a) and (

d) of the TMA .

He therefore was not prepared to " “strike” " these claims. [ 47 ] Justice Brown had a different view, however, of Duracell’s use of the term " “the next leading competitive brand” " and effectively dismissed the claims under these same provisions of the TMA involving the latter term. [ 48 ] Finding that Energizer had no right to an accounting of profits under subsection 52(1) of the Competition Act , Justice Brown dismissed this claim on the basis that as a matter of law, the effect of subsection 36(1) of the Competition Act is to limit remedies for breach of subsection 52(1) to the recovery of a plaintiff’s actual loss or damage. [ 49 ] Energizer appealed this judgment to the Federal Court of Appeal.

Duracell cross-appealed from the part of the judgment that dismissed its motion for judgment with respect to Duracell’s use of the phrase " “the bunny brand.” " [ 50 ] The Federal Court of Appeal set aside the judgment of the Federal Court in part and dismissed Duracell’s cross-appeal: Energizer Brands, LLC v The Gillette Company , 2020 FCA 49 [ Energizer FCA 2020 ] at para 61 . In particular, the Federal Court of Appeal allowed Energizer’s appeal of the Federal Court’s dismissal of Energizer’s claims under paragraphs 7 (

a) and 7 (

d) and subsection 22(1) of the TMA in respect of Duracell’s use of the phrase " “next leading competitive brand.” " In other words, these claims were restored for the eventual trial of the matter. [ 51 ] With respect to the issues concerning the TMA , the Federal Court of Appeal found that Duracell’s notice of motion did not put in issue the question of whether the phrases used by Duracell were sufficiently similar to the Energizer Trademarks (to evoke in consumers the necessary linkage between them).

The Federal Court thus should not have addressed it because doing so deprived Energizer of the opportunity to make its case on the issue. [ 52 ] With respect to the issues concerning the Competition Act , the Federal Court of Appeal held that the Federal Court correctly

dismissed Energizer’s claim for an accounting of profits because the limiting words of subsection 36(1) are clear and limiting (tocompensation only for loss, damage and costs). Further, the question of whether equitable remedies are available under subsection 52(1)is a pure question of law that appropriately may be decided on a motion for

summary judgment. The question of whether Energizer isentitled to an accounting of profits pursuant to subsection 52(1) of the Competition Act thus no longer is in issue. [53] The parties subsequently filed fresh as amended pleadings. Although Energizer’s fresh as amended pleadings refer to Duracell’s"“product packaging and point-of-sale materials,”" I find that only the At Issue Stickers used on the packaging in fact are in issue in thisaction.

It is not clear from the pleadings if Energizer intended that the terms "“product packaging”" and "“point-of-sale materials”"would be considered different media or would be read interchangeably or as alternative phrases, but nothing turns on this in my view as Iexplain below. VI.

Trial Issues [54] In light of the foregoing, and with regard to the parties’ Agreed Statement of Issues, I find that the main issues for determination inthe trial of the Plaintiffs’ action are: A.Have the Defendants used one or more of the Plaintiffs’ registered trademarks in a manner likely to have the effect ofdepreciating the value of the goodwill attaching to the trademark(s), contrary to the TMA s 22(1)?

B.Have the Defendants made false or misleading statements or descriptions in the following, more particularized respects: (1)Have the Defendants made a false or misleading statement tending to discredit the Plaintiffs’ business or goods, contrary to theTMA s 7(a)? (2)Have the Defendants used, in association with their goods, any description that is false in a material respect and likely tomislead the public as to the character, quality or performance of the Defendants’ goods, contrary to the TMA s 7(d)? (3)Have the Defendants, for the purpose of promoting, directly or indirectly, the supply or use of a product, or any businessinterest, by any means whatever, knowingly or recklessly made a representation to the public that is false or misleading in amaterial respect, contrary to subsection 52(1) of the Competition Act, RSC 1985, c C-34?

C.Are the Defendants’ impugned activities permitted by Agreement with the Plaintiffs? D.To what remedies are the Plaintiffs entitled, and in what amounts where applicable, if they establish any of issues A-C above,and the Defendants do not establish issue C (or, even if established, the Agreement is not a complete answer or defence), includinginjunctive relief, damages or an accounting of profits, punitive or exemplary damages, prejudgment interest and costs? VII.

Analysis [55] In the course of trial, Energizer raised objections to the evidence of Duracell’s experts and addressed the objections more fully inclosing submissions. I deal with these objections as a preliminary issue in this Analysis. Preliminary Issue: Energizer’s Objections to Expert Evidence

(1) Dr. Kolsarici [56] For the reasons below, I determine that a portion of Dr. Kolsarici’s expert report will be excluded. [57] I start my analysis of Energizer’s objection to Dr. Kosarici’s expert evidence with the premise that "“[e]vidence that is otherwiselogically relevant may be excluded… if its probative value is overborne by its prejudicial effect”": R v Mohan, (SCC),[1994] 2 SCR 9 at 21; White Burgess Langille Inman v Abbott and Haliburton Co., 2015 SCC 23 at para 19. [58] Dr.

Kolsarici performed a DID analysis that formed the basis of her expert opinion about the impact of the Sticker Campaign on thesales of the relevant DURACELL batteries. She describes in her report that DID is a quasi-experimental design that makes use oftreatment and control groups based on longitudinal data to obtain appropriate counterfactuals to estimate a causal effect. The goal in theDID estimation is to control for unobserved variables (such as the parties’ other marketing activities or industry conditions) that can biasthe estimates of the causal effects. [59] In addition, according to Dr.

Kolsarici, the DID technique permits the evaluation of whether the difference in the differences isstatistically different from zero. A statistically significant positive value points to the Sticker Campaign having caused an economicallymeaningful lift in battery sales volumes for Duracell, while the converse would mean a drop in sales for Duracell. [60] It was revealed during cross-examination at trial that Dr. Kolsarici did not disclose in her report that her PhD student ("“Simon”")assisted with portions of the data analysis conducted in connection with the DID analysis. Nor had Dr.

Kolsarici disclosed, prior tocross-examination, that she had asked Duracell to prepare "“a more collected and cleaned-up version of the data”" which resulted in Dr.Kolsarici being provided with two data files. [61] I agree with Duracell that they addressed the latter omission conclusively during the trial. I note, for example, that after theomission came to light, Mr. Harington was called as a fact witness to testify about having prepared the merged data set (comprising anagglomeration of the data contained in Duracell Productions 70 and 110 to 119). I also note that Duracell Productions 110 to 119 are

listed in a

schedule to the parties’ Agreement Respecting Evidence. Specifically, the parties agreed that listed documents would be admissible at trial for the truth of their content without further proof. Although Duracell Production 70 is not listed, nonetheless I find that Mr. Harington’s testimony about the preparation of the merged data set from these productions answers Energizer’s hearsay objection. [ 62 ] Simon’s involvement, however, is a different issue in my view. This is not a case where Dr.

Kolsarici attributed statements or work to Simon, as contemplated in Coldwater First Nation v Canada (Attorney General) , 2019 FCA 292 at paras 43-44 . Rather, there was no mention of him at all in her expert report. I contrast this omission with the statement in Mr. Harington’s expert report, for example, to the effect that he prepared the report with the assistance of other professionals under his direction and supervision, and with that of Dr.

Whitacre in his expert report to the effect that he instructed and oversaw counsel in performing numerous calculations (regarding battery performance) and then reviewed the calculations to confirm their accuracy. [ 63 ] Dr. Kolsarici explained in cross-examination that while she and Simon performed the same exercise separately, they arrived at the same results. She also admitted, however, that they individually were using different data sets at different stages of the analysis, and further, that Energizer could have been provided with the data set of either of them. [ 64 ] Dr.

Kolsarici also testified that only Simon prepared the CSV files that were fed into the " “R” " computer program, as a final step, to perform the regression analysis. According to Dr. Kolsarici, she did not prepare any of them because it just involved splitting the same data into four and it was not a complex part of the analysis. Complex or not, in my view these steps represent a significant part of Dr.

Kolsarici’s methodology and the tests she relied on to prepare her opinion. [ 65 ] Contrary to Duracell’s position on this issue, I find that Simon’s involvement in the data analysis was more than simply as " “support staff” " or a " “technician” " and, thus, should have been disclosed to Energizer. That Simon did not find any errors in Dr. Kolsarici’s work that would have changed her analysis, as she testified, misses the point in my view because, at the very least, Dr.

Kolsarici relied on Simon’s work as a double check of her own work, so much so that, as she admitted in cross-examination, it was either of their work product that was provided to Energizer. I infer in the circumstances that Dr. Kolsarici saw value in having Simon perform the double check, rather than double-checking her work herself. Further, no explanation was provided how, when using different data sets at different stages of the analysis, Dr.

Kolsarici and Simon arrived at the same result. [ 66 ] I am convinced on a balance of probabilities that based on this evidence, Simon, a PhD student, and not a summer student for example, was more than just " “support staff” " or a " “technician.” " [ 67 ] The FCR append a

Schedule (under Rule 52.2 ) entitled " “Code of Conduct for Expert Witnesses” " [Code]. The Code itemizes with particularity what an Expert’s Report shall include. Paragraph 3(

i) describes " “a

summary of the methodology used, including any examinations, tests or other investigations on which the expert has relied, including details of the qualifications of the person who carried them out , and whether a representative of any other party was present.” " [Emphasis added.] [ 68 ]

Schedule " “B” " to Dr. Kolsarici’s Expert Report is a signed Certificate Concerning Code of Conduct for Expert Witnesses certifying that she has read the Code. [ 69 ] I find that the words " “any examinations, tests or other investigations on which the expert has relied” " are broad enough to capture the work performed by Simon in connection with the DID analysis, such that his qualifications (including, inherently, his identity) should have been disclosed in Dr.

Kolsarici’s Expert Report, thereby affording Energizer the opportunity to consider the impact of this knowledge on its litigation strategy and to make whatever consequential, permitted adjustments it deemed necessary. Energizer unknowingly was deprived of this opportunity, to its prejudice. [ 70 ] I add that I am not persuaded by Duracell’s attempt to draw a parallel with the assistance Energizer’s expert, Scott Davidson, received from Katie Gosnell. Unlike Dr. Kolsarici, Mr. Davidson disclosed in his expert and reply reports that he was assisted by Ms. Gosnell who worked under his supervision and direction.

Duracell thus was not deprived of the opportunity to take this information into account in their litigation strategy leading to trial, unlike the situation that Energizer faced when they first learned of Simon’s involvement in Dr. Kolsarici’s DID analysis at trial. [ 71 ] Noting that the FCR Rule 52.2(2) gives the Court discretion to exclude some or all of the expert’s affidavit or statement, I exercise my discretion to exclude that portion of Dr. Kolsarici’s expert report dealing with the DID analysis, specifically paragraphs 258-272. In my view, this remedy is proportional in this case to Dr.

Kolsarici’s failure to comply with para 3(

i) of the Code . Further, I am not persuaded that the outcome of this action turns on the presence or absence of Dr. Kolsarici’s DID analysis.

(2) Dr. Whitacre [ 72 ] Contrary to Energizer’s submissions, I am not persuaded that parts of Dr. Whitacre’s evidence should be discounted on the grounds raised, with an exception that in my view is inconsequential. [ 73 ] Energizer contends that Dr. Whitacre’s evidence should be given less weight because his experience in AA batteries was limited to a " “small number” " of AA alkaline batteries for a company he founded called Scaled Ionics LLC, and because he ventured into areas that he is not an expert in such as statistics and consumer behaviour.

Regarding the former, Energizer has failed to convince me that Dr. Whitacre’s expertise in respect of AA batteries was somehow constrained or lessened by reason of the number of AA batteries with which he had experience. [ 74 ] Regarding the issue of whether Dr. Whitacre’s expert report strayed beyond his expertise, Dr. Whitacre confirmed that he was not present as an expert in statistics.

While he commented in his expert report on the absence of a " “statistically significant” " correlation between battery age and performance over the relevant periods, he clarified (based on his opinion, I infer), and in more plain language, that Dr. Adams did not show that Duracell gained a real advantage in the testing just because Duracell batteries were 73 days younger on average. In the circumstances, although I am prepared to give little weight to the statement about a lack of statistical significance, I am

not persuaded that it makes much difference in light of Dr. Whitacre’s clarification. [ 75 ] I further find that Dr. Whitacre’s references to the " “consumer experience” " were not about consumer behaviour as such, but rather they were about describing, in a plain and obvious way, relative battery performance (that a consumer may encounter or experience upon the purchase and use of batteries) by testing batteries obtained from the marketplace. In my view, this is exemplified by Dr.

Whitacre’s statement in his expert report that, " “[t]esting batteries purchased from the market is the best way to simulate the customer’s experience of comparative performance.” " [ 76 ] Energizer also argues that the criticisms of Dr. Adam’s expert report must be tempered by Dr. Whitacre’s admission that Dr. Adams fulfilled the mandate he was given. I find, however, that Dr. Whitacre’s criticisms rest in the instructions Dr. Adams was given. [ 77 ] I will deal with Dr. Whitacre’s evidence in further detail in connection with the analysis of whether Duracell made false or misleading statements or descriptions.

(3) Andrew Harington [ 78 ] Contrary to Energizer’s submissions, I am not persuaded that the Code breaches they say Mr. Harington committed align with those of Dr. Kolsarici described above. As I explain, I find that the probative value of Mr. Harington’s evidence outweighs any possible prejudicial effect. [ 79 ] Energizer’s complaint about asserted breaches of the Code are two-fold. First, they submit that Mr. Harington breached paragraph 3(

d) of the Code because, as he testified, he spoke with employees of Duracell to understand the Duracell sales transaction documents, but did not disclose such discussions anywhere in his report. According to Energizer, Mr. Harington also did not identify in his report the information on which he relied that he obtained from these discussions. Energizer points to Mr. Harington’s own " “template” " expert report that included " “documents and discussions” " in his Scope of Review, and submits that no discussions were described in this case. [ 80 ] I note Mr.

Harington’s testimony that his discussions with Duracell employees were for the purpose of confirming his understanding of the information conveyed in the documents he was provided, and further, that the employees did not tell him anything he could not see in the documents themselves. He gave an example of a battery size associated with a brand code where the size sometimes was referred to as 10 and sometimes was referred to as 10/230. [ 81 ] I find there is no evidence, however, that Duracell employees assisted Mr. Harington in his analysis of the data. Further, unlike the case with Dr. Kolsarici’s report, Mr.

Harington’s expert report states that it was prepared with the assistance of other professionals under his direction and supervision, whose identities he provided in cross-examination when asked for this information. [ 82 ] Second, Energizer argues that Mr. Harington failed to provide " “a

summary of the methodology used,” " as required under paragraph 3(

i) of the Code. Footnote 6 is the only description in his report of the data aggregation process, a process they contend resulted in material errors. They add that Mr. Harington also did not disclose his use of the " “R” " computer program for the data aggregation process. Regarding the latter, I observe that Mr. Davidson similarly did not describe what software program(

s) he used to prepare his analysis, and further, the parties and their expert witnesses relied on Excel spreadsheets and applicable software tools at trial to demonstrate conclusions that could be drawn from the various data productions. [ 83 ] I also note that footnote 6 details the productions Mr. Harington relied on in his analysis. Although Mr. Harington testified that he referred to Duracell Production 70 to confirm the applicable brand codes, in my view this does not undermine his statement in footnote 6 that he did not rely on this production because it contains dollar value sales rather than unit sales.

I find that his testimony was consistent with this reason for not relying on this production otherwise. [ 84 ] In the circumstances, I am not convinced that Mr. Harington’s expert evidence should be given little weight as Energizer argues. Further, I conclude the probative value of Mr. Harington’s evidence, that involves a causation analysis, outweighs any potential prejudice. A.

Depreciation of Goodwill? [ 85 ] I find that Energizer has shown likely depreciation of goodwill in its registered trademarks ENERGIZER and ENERGIZER MAX by Duracell’s Sticker Campaign in a manner contemplated by the TMA s 22(1) with regard to the Energizer HA Sticker and the Energizer MAX AA Sticker. I am not persuaded, however, that Energizer has established depreciation of goodwill in connection with the Bunny Brand HA Sticker and the Next Leading Competitive Brand AA Sticker. Below is a

summary of the legal principles and marketing concepts that I considered in arriving at this determination, followed by my analysis.

(1) Legal Principles [ 86 ] This Court accepts that " “[c]omparative advertising helps consumers make better choices” " : Petline Insurance Company v Trupanion Brokers Ontario Inc. , 2019 FC 1450 [ Petline ] at para 9 , citing Kirkbi AG and Lego Canada Inc v Ritvik Holdings Inc et al , 2003 FCA 297 at para 71 , aff’d 2005 SCC 65 . [ 87 ] That said,

section 22 of the TMA limits comparative advertising in Canada by stipulating that no one can use the registered trademark of another in a way likely to depreciate the value of the goodwill attached to the trademark. [ 88 ] To succeed in a claim for depreciation of goodwill, a plaintiff must meet the four-part, conjunctive test described by the Supreme Court of Canada as follows: (

i) the defendant has used the claimant’s registered trademark with goods or services, regardless whether they are competitive, with those of the claimant; (ii) the claimant’s registered trademark is sufficiently well known to have a significant

degree of goodwill attached to it, although there is no requirement that the trademark be well known or famous; (iii) the defendant’s useof the trademark was likely to have an effect on that goodwill (in other words, there was a linkage); and (iv) the likely effect is todepreciate or cause damage to the value of the goodwill: Veuve Clicquot, above at para 46. [89] The "“use”" contemplated by

section 22 must involve a manner of use described in

section 4 of the TMA, although it does not needto be used as a "“trademark”" (in the sense that Duracell did not use ENERGIZER and ENERGIZER MAX for the purpose ofdistinguishing Duracell’s own DURACELL branded batteries; in other words, they made a "“non-confusing use”"): ClairolInternational Corp. et al v Thomas Supply and Equipment Co. et al, (CA EXC), 2 Ex CR 552 [Clairol] at 570; H-DU.S.A., LLC v Berrada, 2014 FC 207 [Berrada] at para 67. [90] Nor is it a requirement that the challenged trademark be identical to the registered trademark; trademarks involving misspellings andmissing words (i.e.

VEUVE CLICQUOT v CLIQUOT) may be sufficient to "“convey the idea”" of, or create the necessary associationwith, the registered trademark in the mind of the consumer: Veuve Clicquot, above at para 48. When Justice Binnie signalled hisagreement that "“use of the word ""Cliquot conveys the idea,”" I infer he meant the idea of VEUVE CLICQUOT and not justCLICQUOT because the plaintiff’s registered trademark was the former, not the latter. [91] Goodwill and depreciation are not defined in the TMA.

The Supreme Court of Canada, however, addresses these gaps by guidingthat "“[i]n ordinary commercial use, [goodwill] connotes the positive association that attracts customers towards its owner’s wares orservices rather than those of its competitors,”" while the ordinary dictionary meaning of "“depreciate”" means to "“lower the value of,”"as well as to "“disparage, belittle, underrate”": Veuve Clicquot, above at paras 50, 63. In addition, a trademark’s value can be loweredwhen different users bandy it about, or when their actions cause "“blurring”" (i.e.

"“whittling away”" the trademark’s ability todistinguish the owner’s products and attract consumers) or "“dilution,”" resulting in lesser distinctiveness: Veuve Clicquot, above atparas 63-64; H-D U.S.A., LLC v Varzari, 2021 FC 620 [Varzari] at para 49. [92] Put another way (paraphrasing Justice Thurlow to align more closely with Veuve Clicquot),

section 22 prohibits a competitor’s useof the owner’s trademark for the purpose of appealing to the owner’s customers in an effort to weaken their habit of buying what theyhave bought before or the likelihood that they would buy the owner’s goods or whatever binds them to the owner’s goods so as to changetheir buying habits: Clairol, above at 575. [93] Further,

section 22 "“presupposes the existence of significant goodwill capable of being depreciated by a non-confusing use”":Veuve Clicquot, above at para 53.

Non-exhaustive factors to consider in determining the existence of "“significant goodwill”" include thedegree of recognition of the mark within the relevant universe of consumers, the volume of sales and the depth of market penetration ofproducts associated with the claimant’s mark, the extent and duration of advertising and publicity accorded the claimant’s mark, thegeographic reach of the claimant’s mark, its degree of inherent or acquired distinctiveness, whether products associated with theclaimant’s mark are confined to a narrow or specialized channel of trade, or move in multiple channels, and the extent to which the markis identified with a particular quality: Veuve Clicquot, above at para 54. [94] In addition, the Court must consider the effect on goodwill or linkage from the perspective of the "“somewhat-hurried consumer;”"absent linkage, there can be no impact, whether positive or negative, on goodwill: Veuve Clicquot, above at para 56.

Albeit in the contextof the test for trademarks confusion, Justice Binnie also describes the somewhat-hurried consumer as someone who, as a matter of firstimpression, does not pause to give the matter any detailed consideration or scrutiny: Veuve Clicquot, above at para 20.

As observed morerecently by Justice Rothstein, it is "“an average person who goes into the market and not one skilled in semantics”": Masterpiece Inc. vAlavida Lifestyles Inc., 2011 SCC 27 [Masterpiece] at para 83, citing Ultravite Laboratories Ltd. v Whitehall Laboratories Ltd., (SCC), [1965] SCR 734. [95] Further, rooted in the linkage concept is the manner in which a trademark operates.

As Justice Binnie described in another seminaldecision in 2006, trademarks work as a purchasing decision shortcut and thus perform an important function in the market: Mattel, Inc. v3894207 Canada Inc., 2006 SCC 22 [Mattel] at para 21.

In my view, this concept aptly applies to comparative advertising. [96] Decades earlier, the Supreme Court of Canada observed in a groundbreaking passing off case that external features of a product,such as packaging, are "“a source of information associated with reputation for a consumer or a group of customers[; a]ppearance is thususeful not only in product recognition but also to distinguish one product from another with the same uses”": Ciba-Geigy Canada Ltd. vApotex Inc., (SCC), [1992] 3 SCR 120 [Ciba-Geigy] at 138-139. [97] As the Supreme Court of Canada reminds us, the average consumer (albeit in a pharmaceutical context, but also applicable in othercontexts in my view) may be a repeat customer for the product in question and not necessarily a first-time purchaser.

"“Patients taking adrug for some time can become accustomed to it and insist on a particular brand. Generally when a person is satisfied with a product, hetends to remain faithful to it”": Ciba-Geigy, above at 150 [emphasis added].

(2) Marketing Concepts [98] In addition to the above legal principles, the expert marketing evidence discloses the concepts described below regarding the role ofpackaging and labelling, on brand equity (the value of a company’s brand, including the result of marketing efforts attributable to thebrand) and brand loyalty (the behavioural intention toward repeat purchasing), both of which in my view are aspects of goodwill. [99] Consumers take only seconds to absorb the information on packaging and labels in a retail setting – 12.2 to 25 seconds on averageaccording to Dr.

McNeish, or even less time for low-involvement purchases such as batteries according to Dr. Kolsarici. This isconsistent, in my view, with the concept of the average hurried consumer. [100] The information conveyed by packaging and labels assist consumers to make purchasing decisions. Factors such as colour, shape,size and font of text and numbers, among others, may influence the decision. Well-designed packages and labels can drive sales andbuild brand equity and brand loyalty. Brand loyalty can be an important factor in a purchasing decision, although possibly less so in thecase of a low-involvement purchase.

[ 101 ] The in-store positioning of products can impact, however, the amount of information a hurried consumer will notice (such as price, size of battery and possibly brand) at the time of purchase. In addition, time pressure and distraction in the real life shopping context decreases information recall. [ 102 ] Objective data and research regarding current marketing campaigns assist companies to understand their brand equity - or goodwill - and the effectiveness of their campaigns, and to design future campaigns.

Goodwill is the sum of current marketing activities, plus some goodwill carried over from previous periods. [ 103 ] Sales data are a proxy for (i.e. way of measuring) goodwill. [ 104 ] Dr. Kolsarici underscores the negative impact comparative advertising ( " “blow back” " ) can have on the brand owner that engages in such form of promotion. The effectiveness of advertising campaigns diminishes over time by repeat purchases and increased consumer knowledge. Further, consumers are inherently skeptical of advertising claims. (Dr.

McNeish also recognized, in cross-examination, that consumers are becoming skeptical or that they are saying they are skeptical.) [ 105 ] I make two observations about the marketing evidence in this case. First, the above concepts for the most part are commonsensical, in my view. Second, notwithstanding their expertise, both experts engage in speculation about consumers’ reaction to the At Issue Stickers. [ 106 ] The marketing experts agree, as do I, that almost all households buy batteries, there being a wide range of battery-powered products.

This is supported by the range of products involved in the AA battery testing data discussed below. Dr. McNeish opined that the hypothetical average consumer is someone in their early 40s, who earns roughly $70,000, and who makes a choice only between DURACELL and ENERGIZER batteries, notwithstanding that there would be " “many variables” " that the average consumer would consider.

In my view, this hypothetical distracts, rather than assists the Court in considering how the average, hurried consumer would perceive the At Issue Stickers and the impugned performance claims in a typical retail setting for HA and AA batteries. [ 107 ] In addition, Dr. McNeish’s opinion about consumers’ perceptions is based primarily on viewing the At Issue Stickers up close and in isolation, rather than in the context of the retail settings in which the packages of batteries bearing the stickers were sold. Dr.

McNeish did admit in cross-examination to going into a store in July 2021 after the Sticker Campaign had ended to look at battery displays. There is no mention of this, however, in her expert report. She further confirms she did not have access to any photographs of DURACELL or ENERGIZER batteries when the At Issue Stickers were on a display in a store. [ 108 ] Dr. McNeish further speculates that the average Canadian battery consumer, whose time is limited, would focus on the At Issue Stickers and want to understand the nature of the comparisons being made, and would review the stickers.

They would assume that the information they do see is accurate. They would not take time, however, to review footnoted (or asterisked) fine-print information. In other words, they would parse the label and read no further before making their purchasing decision but they would take the time to read the full sticker after arriving home, as Dr. McNeish confirmed in cross-examination. [ 109 ] Dr. McNeish also posits that while consumers would understand the meaning of " “up to” " in other contexts, they would not understand what it means on the At Issue Stickers.

Hence, they would assume that the batteries last 15% or 20% longer, as the case may be, in most if not all devices, despite the disclaimer that " “Results vary by devices and usage patterns” " about which they would not have enough time to process the meaning. [ 110 ] Dr.

McNeish further states, without support, that the " “square label shape used by Duracell suggests longer life and strength.” " In addition, she assumes, again without support, that consumers of Duracell batteries in packages with the At Issue Stickers will store surplus batteries in the package, thus reinforcing Duracell’s comparative claims over time as the batteries are used. [ 111 ] Although Dr.

Kolsarici acknowledged the retail context, she nonetheless dissected Duracell’s claims and speculated about how consumers would interpret different aspects of them, if they took the time to read the At Issue Stickers amid the " “jumble” " and " “clutter” " of different battery packages on display. [ 112 ] For example, Dr.

Kolsarici stated in her report that the phrase " “up to 15% longer lasting” " means that " “these batteries could be anywhere between 0% to 15% longer lasting than those of the comparator” " and that the " “ordinary consumer would know that it could not place any reliance on such a performance claim.” " [ 113 ] I pause here to note that the Energizer HA Sticker does not include the qualifier " “up to,” " unlike the other At Issue Stickers. [ 114 ] As a further example, Dr.

Kolsarici opined that consumers would view the phrase " “the next leading competitive brand” " as a dodge, a loophole for Duracell, as well as some kind of evasion. She also expressed the view that consumers would not read " “the bunny brand” " as referring to " “any particular depiction of a bunny or any particular trademark” " and that consumers’ understanding of whether it referred to " “the Energizer brand and its batteries would need to be measured.” " Dr. Kolsarici also emphasized the need for measuring consumer reaction regarding the phrase " “the next leading competitive brand.” " [ 115 ] While Dr.

Kolsarici provided little support for the above opinions, she did point to specific marketing literature as the source regarding her list of key in-store purchasing drivers – price, promotion, product location (i.e. aisle placement and display location), brand name, and convenience and habit. Dr. Kolsarici also pointed to research indicating that when consumers shop for low-involvement products, they typically do not examine product information or brand. I note that Dr.

McNeish disagrees that batteries are an example of a " “low-involvement” " purchase. [ 116 ] That said, I find that the parties did not furnish any survey evidence that potentially could provide evidence of consumer reactions in the marketplace to the Sticker Campaign — " “exactly the question that the trial judge is addressing in a [depreciation] case[; t]his evidence is not something which would be generally known to a trial judge, and thus unlike some other expert evidence, it would not run afoul of the second Mohan requirement that the evidence be necessary” " : Masterpiece , above at para 93 .

[ 117 ] In particular, the Plaintiffs did not provide any evidence from consumers or employees about the direct impact of the sticker claims, if any, on goodwill (i.e. " “their habit of buying what they have bought before” " ): Clairol , above at 575; Petline , above at para 34 . This was confirmed during the cross-examination of Dr. McNeish.

She testified to the use of different methodologies, including in-depth consumer interviews, to test hypotheses (some of which were not borne out) in connection with studies and surveys she conducted and papers she authored or coauthored involving consumer behaviour that were referenced in her curriculum vitae. Dr.

McNeish admitted she did not undertake any such studies or surveys regarding the Canadian battery market before preparing her expert report in this matter, however; her report was based largely on a literature review involving the academic research of others in other product areas (i.e. not including batteries). She also admitted that the way one builds knowledge is through repetitively repeating studies. [ 118 ] In fact, there is no dispute that neither of the marketing experts engaged in primary data collection (i.e. the collection of data from the field, through survey or otherwise).

Nor did either of these experts consider the import of the large retailer customers of both Energizer and Duracell, such as Walmart and Shoppers Drug Mart, versus the end consumer who purchases the batteries from the retailers. [ 119 ] The downside of a lack of primary data about the consumer reaction to the At Issue Stickers is highlighted, in my view, in Energizer’s cross-examination of Duracell’s fact witness, Ramon Velutini. When asked, " “What did Duracell understand the consumer to take from the reference to the ‘next leading competitive brand,’” " Mr.

Velutini answered, not surprisingly, that " “I do not know what they would take as that” " and that he would be speculating. He later explained that " “this was a specific claim of one of our product versus an Energizer product and the intent was to communicate it in the most truthful way.” " He confirmed more than once that the Energizer AA battery was the intended comparator in the claim. [ 120 ] Putting aside the issue of " “truthfulness” " of the claim until later in these Reasons, I take from Mr.

Velutini’s testimony that Duracell intended the reference to " “the next leading competitive brand” " to mean an Energizer product. Whether the consumer actually understood the reference as such and the likely effect on goodwill, if any, is what the Court must consider absent any primary data that might have assisted the Court. [ 121 ] Neither marketing expert truly opines, in my view, about the actual purchasing environment. One expert, Dr. McNeish, is more paper-based and hypothetical in approach, while the other, Dr. Kolsarici, based her opinion on photographs of sales racks.

It is not clear from the photographs how close the photographer stood to the displays. More importantly, it cannot be understood from photographs of racks of one party’s batteries, how the average consumer would approach the display and perceive those batteries or any others nearby and make a hurried purchasing decision.

The full real world context is missing from both marketing experts’ evidence, notwithstanding their expertise. [ 122 ] As a consequence, and recognizing that actual, measurable negative impact is not the test, I am left applying my own common sense as a potential buyer of the goods, but leaving aside " “my own idiosyncratic knowledge or temperament,” " to the issue of whether the Defendants’ Sticker Campaign likely resulted in a depreciation of the goodwill attaching to Energizer’s Trademarks, contrary to the TMA s 22: Masterpiece , above at para 92 . [ 123 ] Although I do not disagree necessarily with Energizer that a survey is not a requirement to succeed on a TMA s 22 claim, the cases on which it relies in this regard ( Toys " “R” " US (Canada) Ltd. v Herbs " “R” " US Wellness Society , 2020 FC 682 [ Toys " “R” " Us ] at para 59, and Varzari , above at para 48 where linkage was inferred in the absence of survey evidence), are distinguishable in my view for at least two reasons.

First, neither respondent in either of these cases participated in the proceeding. Second, and more importantly, in issue was the respondent’s use of the trademark or logo that the respondent adopted to distinguish their own goods or services. No such use is present in the case before me which revolves around Duracell’s comparative advertising in the form of the At Issue Stickers.

Neither Toys " “R” " Us nor Varzari is a case about comparative advertising. [ 124 ] Interestingly, in the case of Subway IP LLC v Budway, Cannabis & Wellness Store , 2021 FC 583 , on which Energizer also relied in its closing submissions, there was evidence of " “social media users making the immediate connection between the BUDWAY store and Subway’s business” " (at para 42).

No such evidence was presented to the Court in the case before me. [ 125 ] I acknowledge that there could be instances where the requisite linkage can be formed subtly or subliminally: Berrada , above at paras 111-112 , citing Veuve Clicquot , above at para 49.

There is no convincing evidence here, in my view, that the average, hurried consumer was or could have been persuaded to develop or change their buying habits or brand loyalty, whether subtly or subliminally, because of the At Issue Stickers. [ 126 ] There is evidence, however, that these parties, who are sophisticated and represent the leading battery brands in Canada, periodically conduct or have conducted for them brand audits or surveys to keep on top of their respective market shares and the drivers of consumer purchasing decisions in their market.

In other words, I am not persuaded that a survey to assist with the determination of the issues in this case would be a " “unicorn.” " [ 127 ] As a final point before turning to the specific claims, Duracell argues that absent proof of lost sales (i.e. a measure of or proxy for depreciation), there can be no likely depreciation of goodwill: Scott Technologies Inc. v 783825 Alberta Ltd. (Scott Safety Supply Services) , 2015 FC 1336 [ Scott Technologies ] at para 82 .

In my view, this finding in the latter case must be viewed in context. [ 128 ] While the parties in Scott Technologies had overlapping customer bases, they offered different goods/services. Further, there was " “no real evidence of confusion” " despite 20 years of coexistence in the market: Scott Technologies , at para 79 .

The Court described the circumstances at play in the case as those where the plaintiff lay in the weeds, allowing another to carry on and invest in and grow its business, and then sprung up and enlisted the aid of the court after unfairly adopting the very name, Scott Safety, the defendants had been using for 20 years: Scott Technologies , at para 84 . [ 129 ] In other words, the Court’s findings in Scott Technologies of no passing off, no infringement and no depreciation of goodwill by the defendant depended very much, in my view, on the particular circumstances including the plaintiff’s own conduct. [ 130 ] Further, I am not convinced that absent proof of lost sales, there can be no " “likely” " depreciation of goodwill in every case, for

several reasons. First, as noted above, Veuve Clicquot (paras 63-64) and Varzari (para 49 ) recognize that a trademark’s value can be lowered when different users bandy it about, or when their actions cause " “blurring” " or " “dilution,” " resulting in lesser distinctiveness. Second, and more importantly in my view, subsection 22(2) of the TMA contemplates that a court may decline to order the recovery of damages or profits in an action for depreciation of goodwill under subsection 22(1) .

It may be appropriate for a court to exercise such discretion where, for example, the likely depreciation of goodwill is more subtle or less obvious than actions involving passing off and infringement claims as well, or to avoid double recovery in cases where passing off and infringement claims also have been asserted and proven. [ 131 ] Bearing the foregoing discussion in mind, I thus turn next to whether the Sticker Campaign, involving the At Issue Stickers, was likely to depreciate the value of the goodwill attaching to (

a) ENERGIZER and ENERGIZER MAX, (b) " “the bunny brand,” " and (c) " “the next leading competitive brand,” " as claimed by Energizer.

(3) Analysis (

a) ENERGIZER and ENERGIZER MAX [ 132 ] Although Dr. Kolsarici was cross-examined at trial about reliance on an

article by Bereskin & Parr LLP (for the proposition that comparative advertising is fairly commonplace) published in the December/January 2012 World Trademark Review , I do not disagree with the following observation in the article: " “Owing to the definition of ‘use’ in the act, if a competitor’s trademark is registered for goods, there is a risk attached to making comparative claims when using it on packaging or wrappers.” " See Clairol , above at 569. The question for the Court to answer with ENERGIZER and ENERGIZER MAX in particular is whether that risk has been realized here.

In my view it has, for the reasons below. [ 133 ] There is no dispute that for a period of time from 2014 to 2015, a relatively small number of DURACELL HA and AA batteries were sold in Canada in packages bearing the Energizer HA Sticker and the Energizer MAX AA Sticker respectively in the context of comparative performance claims. These stickers differ from the other At Issue Stickers because they bear registered Energizer Trademarks, namely, ENERGIZER (registration numbers TMA157162 and TMA740338 ) and ENERGIZER MAX (registration number TMA580557 ).

These trademarks thus were used by Duracell in the manner contemplated by the TMA s 4, although not for the purpose of distinguishing their own batteries; that is, a non-confusing use. [ 134 ] That substantial goodwill attaches to the Energizer Trademarks is not in issue, in my view. According to Jeffrey Roth, Energizer is one of the world’s largest primary battery manufacturers, anchored by its globally recognized ENERGIZER brand.

ENERGIZER batteries have been sold in Canada since at least 2010, and from 2014 to 2016, Energizer spent more than |||||||||||||| in Canada for the purpose of marketing ENERGIZER batteries. I find in the circumstances, that the trademark ENERGIZER is a well known, if not famous trademark, and by implication, ENERGIZER MAX, the dominant element of which is ENERGIZER, is as well.

Duracell went so far as to acknowledge the fame of the Energizer Trademarks in oral closing submissions, and to accept that significant goodwill resides in them. [ 135 ] I find the linkage factor the more difficult in this case for several reasons. I start with the premise that it is appropriate for the Court to consider how the parties’ batteries would appear to an average consumer somewhat in a hurry, coming across the batteries in a retail or store setting: Puma SE v Caterpillar Inc. , 2023 FCA 4 at paras 53 and 55 . [ 136 ] I agree with Dr.

Kolsarici that the " “jumble” " and " “clutter” " of different battery packages on display in a store militate against the hurried consumer focussing on more than the price, promotion, product location (i.e. aisle placement and display location), and brand name, with habit operating on some level especially for repeat consumers. [ 137 ] As an example, the Plaintiffs’ read-ins admitted at trial included the following photograph:

[ 138 ] The display shows DURACELL AA batteries packaged in quantities of 16 and 8. Only the AA 8 packages bear the Energizer MAX AA Sticker. All of the packages bear prominent stickers about the overall longevity of the batters (i.e. 10 years, except for the 9 volt batteries in the bottom right corner of the image).

Looking at the price of the AA 16 and AA 8 batteries in this photo, the AA 16 batteries retailed for $14.47, while the AA 8 batteries retailed for $8.47. [ 139 ] Based solely on the number of batteries, the price of the AA 16 batteries represents a better deal (i.e. more batteries for less money), than the price of the AA 8 batteries (i.e. $14.47 for 16 batteries versus $8.47 x 2 = $16.94 for 16 batteries).

There is no primary data or survey evidence, however, to assist the Court to understand what the average, hurried consumer would notice on encountering such a display and what factors would inform their purchasing decision when encountering this jumble of information, and more to the point, whether they would be influenced at all by the Energizer MAX AA Sticker or another similar sticker. [ 140 ] While Dr.

Kolsarici points to research that when consumers shop for low-involvement products, they typically do not examine product information or brand, even if I accept that batteries are low-involvement products, I do not accept here that brand is unimportant. [ 141 ] From a common sense perspective, looking at the evidence showing the way in which battery packages are displayed in stores (see paragraphs 12 and 14 above, for example, in addition to the image in paragraph 137), the trademarks ENERGIZER and DURACELL are very prominent and hard to miss, in my view, both on the packages themselves and on any separate in-store displays.

The average consumer who is both literate and numerate also might note, given the size of them, either the number 15 or 20 and the percentage sign, depending on the sticker.

I believe, however, that at the point where they encounter the At Issue Sticker (or the " “First Moment of Truth” " or FMOT, as styled by Duracell’s predecessor) on the sales rack, it is more likely than not that they will not " “pause to give the matter any detailed consideration or scrutiny” " : Veuve Clicquot , above at para 20. [ 142 ] That means in my view, particularly in the absence of any primary data about how consumers actually react to the stickers, a consumer in a hurry is unlikely to pause to look at the packaging long enough to notice the comparators and the qualifications.

This finding does not end the Court’s consideration of the TMA s 22(1), however. [ 143 ] I further find that the Energizer HA Sticker and the Energizer MAX AA Sticker are examples of an owner’s trademarks being bandied about resulting in lost control for the owner and lesser distinctiveness, as noted in Veuve Clicquot and Varzari above, in circumstances where jurisprudence does not permit their use by third parties absent consent, such as on third-party packaging in the case of goods.

The purpose of putting the Energizer Trademarks on the packaging was to promote the sale of DURACELL batteries by suggesting to consumers that they would get a better result using Duracell’s batteries in the hope of getting a part of the market enjoyed by Energizer: Clairol , above at 576. This is borne out in my view by Duracell’s internal presentation, entitled DURACELL REACHING CONSUMERS IN NEW WAYS – Category Academy March 3 rd 2015.

This presentation indicates that a key benefit of strengthening longevity claims is closing more consumers in Duracell to grow the battery category by 5%. [ 144 ] In addition, " “[w]hen parties have done what is complained of for the express purpose of taking away custom enjoyed by competitors and persist in it I see no reason to doubt that they are succeeding in their purpose” " : Clairol , above at 576 [emphasis added].

In my view, there is an increased likelihood of such success in the case of repeat consumers during the Sticker Campaign who would have had an opportunity to read the At Issue Sticker on a previously purchased battery package after purchase.

[ 145 ] I thus conclude in the circumstances that Energizer has shown likely depreciation of goodwill in its registered trademarks ENERGIZER and ENERGIZER MAX by Duracell’s Sticker Campaign in a manner contemplated by the TMA s 22(1). (b) " “the bunny brand” " [ 146 ] I do not disagree with Justice Brown’s finding that, " “[o]n its facts " " Veuve Clicquot stands for the proposition that more than use of an actual registered trade-mark or minor misspellings are prohibited by subsection 22(1) [;] use of part of a mark in addition to the misspellings of part of a mark may also be prohibited” " : Energizer FC 2018 , above at para 56 [emphasis added].

In Veuve Clicquot , while the Defendant’s mark, CLIQUOT , was a misspelling of CLICQUOT , the word VEUVE or any variation was not part of the Defendant’s one-word mark. [ 147 ] I am not persuaded, however, as urged by Energizer, that the following determination by Justice Brown ( Energizer FC 2018 , above at para 49) survived the Federal Court of Appeal’s scrutiny and findings, whether challenged specifically by Duracell or not: " “… subsection 22(1) construed as required by " " Veuve Clicquot prohibits Duracell’s use of the term ‘the bunny brand’ even though it is not a registered trade-mark of Energizer.” " Justice Dawson could not have been clearer in my view when she states, " “the Federal Court committed the same error when it decided an issue not put before it: the issue whether as a matter of fact the phrases at issue would be linked by consumers to the Energizer Trademarks” " : Energizer FCA 2020 , above at paras 44, 49.

I thus find it was open to Energizer and Duracell to advance their respective positions on this issue at trial. [ 148 ] I find that the description " “the bunny brand” " is capable of evoking an image of a bunny that functions as a brand or mark, that is Energizer’s iconic " “spokes-character,” " the ENERGIZER bunny (whether as depicted in registration number TMA399312 or TMA943350 ) . To suggest, as the Defendants urge the Court, that only the use of a " “mark” " by a defendant will ground a claim under

section 22 of the TMA , is to construe this provision too narrowly, in my view, for several reasons. [ 149 ] First, the situation before me is distinguishable from that considered by the Federal Court of Appeal in Venngo Inc. v Concierge Connection Inc. (Perkopolis) , 2017 FCA 96 [ Venngo ] . There, Justice Gleason found that the defendants/respondents did not offend

section 22 when they used the words MEMBER PERKS INCLUDE as " “an introductory phrase, using common English words, to describe its own offerings to its own membership by noting that its perks included the items that appeared in the web links” " (para 83).

Justice Gleason therefore concluded that the words MEMBER PERKS in particular were not being used as a trademark at all. [ 150 ] Rather, I find here that Duracell used the phrase " “the bunny brand” " as a short hand reference to Energizer’s famous ENERGIZER bunny trademark (whether as depicted in registration number TMA399312 or TMA943350 ) , there being no evidence at trial of any other competitor in the battery field using a rabbit or bunny design as or in a trademark.

Paraphrasing Justice Binnie’s observation in Mattel (at para 21 ) about how trademarks operate, in my view Duracell used the phrase " “the bunny brand” " as a shortcut to get the consumer where Duracell wanted the consumer to go in terms of the comparative advertising it used on the Bunny Brand HA Stickers.

Because the reference was not comprised of the registered trademark itself, the only issue in terms of linkage is whether " “the bunny brand” " was " “something closely akin to it” " : Venngo , above at para 83 . [ 151 ] Further, while Duracell did not use the phrase " “the bunny brand” " for the purpose of distinguishing its own goods, there is no question in my mind that it was used in the manner contemplated in the TMA s 4(1).

Specifically, the phrase was marked on the packages at the time of the transfer of the property in or possession of the applicable DURACELL batteries in the normal course of trade such that notice of the intended association (i.e. here, linkage to Energizer) was given to the consumer to whom the property or possession of the batteries was transferred. [ 152 ] Second, on a plain reading of the provision, I find it targets activity that involves a defendant’s use of an owner’s registered trademark " “in a manner” " that is likely to depreciate the value of its goodwill.

Apart from usage that is likely to depreciate, the words " “in a manner” " are not limited in any other way. [ 153 ] Third, because the TMA s 6(5)(

e) contemplates a likelihood of confusion occurring by reason of the ideas suggested as between two trademarks, I find that a manner of usage likely to depreciate, although it need not be confusing ( Veuve Clicquot , above at para 53), similarly can revolve around the ideas suggested by the registered trademark and the " “mark” " used by the depreciator, i.e. here, a bunny that functions as a brand or mark. [ 154 ] Despite examining the issue of depreciation of goodwill in the context of two word marks, the Supreme Court of Canada in Veuve Clicquot nonetheless focussed on the " “distinguishing feature” " of the appellant’s mark and the idea conveyed by it, noting that a misspelling was no defence.

Further, " “[t]he requirements of s. 22 have to be interpreted in light of its remedial purpose” " : Veuve Clicquot , above at para 48. As discussed above, I am mindful that Veuve Clicquot involved not only the misspelling of the second word of the plaintiff’s trademark but also the omission of the first word VEUVE . [ 155 ] That the phrase " “the bunny brand” " may be capable of evoking the trademark, ENERGIZER BUNNY & Design, does not answer fully the issue of linkage in my view.

As with the Energizer HA Sticker and the Energizer MAX AA Sticker, I find on a balance of probabilities that the average hurried consumer is unlikely to pause long enough at the in-store battery rack to read the Bunny Brand HA Sticker and to note the reference to " “the bunny brand” " written in much smaller print than either the trademark DURACELL or the prominent 20% and the words LONGER LASTING. They also might notice the words " “up to” " given their proximity to the latter two elements of the sticker.

That said, there is no primary data or survey evidence one way or the other. [ 156 ] Further, to make the linkage advocated by Energizer requires that the consumer take an extra mental step or steps when confronted with indirect phrase " “the bunny brand,” " in contrast to the more direct trademarks, ENERGIZER and ENERGIZER MAX. First, the consumer would need to see the words " “the bunny brand.” " Second, the consumer would need to think of Energizer’s iconic spokes-character.

Then the consumer would need to remember that the word ENERGIZER is written on the bunny’s drum, thereby completing the link to an Energizer Trademark, or simply recall that a pink, bespectacled bunny with large feet and wearing a drum with ENERGIZER on it is a spokes-character for, or trademark of, Energizer. Steps two and three might be combined for some consumers but

there is no evidence in the form of primary data, such as a survey, to assist the Court in determining how the average hurried consumer,with an imperfect recollection, in fact would have reacted to the Bunny Brand HA Sticker. [157] In the circumstances, I find that Duracell was not bandying about an Energizer Trademark as such.

Absent any evidence ofconsumer reaction to the Bunny Brand HA Sticker, I am unable to find that Duracell likely depreciated the goodwill in the registeredtrademark ENERGIZER BUNNY & Design. [158] Even if I have erred in reaching this conclusion, I further find that, in any event, as discussed below under the heading "“C.Activities Permitted by Agreement?”" the use of the phrase "“the bunny brand”" in this manner is permitted by agreement between theparties. (c) "“the next leading competitive brand”" [159] I am not persuaded that there is any likelihood of depreciation of goodwill in the Energizer Trademarks by reason of Duracell’s useof the phrase "“the next leading competitive brand”" on the Next Leading Competitive Brand AA Sticker: [160] There simply is no evidence before the Court from which it can be deduced or inferred that the average hurried consumer is goingto notice much on this busy label, if anything, beyond the prominent 15%, the words LONGER LASTING or their French equivalentPLUS LONGTEMPS, and possibly "“up to”" or "“""durent jusqu’a”" given their proximity to 15%.

I believe that the chances of aconsumer lighting upon the qualifier "“*Next leading alkaline based on Nielsen sales data,”" and taking the time to learn from such datathat the description "“the next leading competitive brand*”" points to Energizer, at best are slim. Further, there is no evidence about howeven the most determined consumer could or would access Nielsen sales data. [161] Further, I agree with Duracell that the Energizer’s evidence does not prove that the "“next leading competitive brand”" comprises adistinctive aspect of, or may be mistaken for, an Energizer Trademark.

The question is whether the consumer would link "“the nextleading competitive brand”" to an Energizer Trademark, not whether the consumer knows who "“the next leading competit

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