MILANO PIZZA LTD. Plaintiff v. 6034799 CANADA INC.; CHADI WANSA; YOUSSEF ZAHER, A.K.A. JOSEPH ZAHER; AND YOUSEF NASSAR, A.K.A. JOE, 2022 FC 425

Date: 2022 0404 Docket: T-152-17 Citation: 2022 FC 425 Ottawa, Ontario, April 4 , 2022 PRESENT: The Honourable Justice Fuhrer BETWEEN: MILANO PIZZA LTD. Plaintiff and 6034799 CANADA INC.; CHADI WANSA; YOUSSEF ZAHER, A.K.A. JOSEPH ZAHER; AND YOUSEF NASSAR, A.K.A. JOE NASSAR Defendants AND BETWEEN: 6034799 CANADA INC.; CHADI WANSA; YOUSSEF ZAHER, A.K.A. JOSEPH ZAHER; AND YOUSEF NASSAR A.K.A. JOE NASSAR Plaintiffs By Counterclaim and MILANO PIZZA LTD.; MAZEN KASSIS; MARWAN KASSIS; MAHMOUD TABAJA; MILANO BASELINE; AND JOE KASSIS Defendants By Counterclaim AMENDED JUDGMENT AND REASONS Table of Contents I. Overview _ 3 II. Factual Background _ 5

(1) Parties 5

(2) MILANO PIZZERIA Business and Licences Granted by MPL _ 6

(3) Baxter Location _ 11

(4) Third Party PIZZERIA MILANO in Masson, QC _ 16

(5) Parties’ Live Evidence 17

(6) Prosecution History Regarding the Milano Design Registration _ 17

(7) Other Third Party MILANO Marks 19 III. Procedural History _ 19 IV. 2018

Summary Judgment 20 V. Dispute and Issues 22 VI. Relevant Provisions 25 VII. Analysis 25 A. Is the Milano Design Registration Invalid? 26 (

a) Invalidity under the TMA s 18(

b) for lack of distinctiveness 27 (

i) Insufficient controlled licensing under the TMA s 50(1) 27 (ii) Lengthy co-existence of PIZZERIA MILANO in Masson, QC _ 39 (

b) Invalidity under the TMA s 18(

c) because of abandonment 42 (

c) Invalidity under the TMA s 18(

d) because of non-entitlement 42 (

d) Invalidity because claimed first use date precedes incorporation date 44 (

e) Whether Corporate Defendant’s predecessor used the Milano Design Mark prior to March 1994 45 (

f) Invalidity because of lack of disclaimer of MILANO _ 45

(

g) Enforceable rights in the registered Milano Design Mark (and/or the Milano Word Marks) 46 G. Actions and communications of MPL and the Personal Defendants by Counterclaim _ 47 (

a) Have MPL and the Personal Defendants by Counterclaim made false or misleading statements tending to discredit the business, goods or services of the Defendants, in contravention of the TMA s 7(a)? 48 (

b) Have MPL and the Personal Defendants by Counterclaim directed public attention to their goods, services or business in such a way as to cause or be likely to cause confusion with those of the Defendants, in contravention of the TMA s 7(b)? 52 (

c) Have MPL and the Personal Defendants by Counterclaim passed off their goods or services as and for those ordered or requested, in contravention of the TMA s 7(c)? 54 (

d) Have MPL and the Personal Defendants by Counterclaim made use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to their geographical origin, in contravention of the TMA s 7(d)(ii) 55 H. Have the Defendants used the trademark MILANO BAXTER and acquired any reputation or goodwill in this mark? 56 VIII. Conclusions 57 IX. Costs 58 Annex “A” :

Summary of the Parties’ Live Evidence at Trial 62 Annex “B” : Relevant Provisions 71 I.

Overview [ 1 ] At the heart of this dispute are take out restaurants operating as MILANO PIZZERIA in Ottawa and surrounding areas, and the Plaintiff’s rights in the trademark MILANO PIZZERIA & Design reproduced below [Milano Design Mark], that are contested by alleged former licensees: MILANO PIZZERIA & DESIGN [ 2 ] The Milano Design Mark is registered in the Plaintiff’s name under registration number TMA571,144, dated November 22, 2002 for " “take out restaurant services, with delivery” " based on use in Canada since at least as early March 1994 [Milano Design Registration]. No predecessor in title is named.

The word PIZZERIA is disclaimed. [ 3 ] The registrability of the Milano Design Mark at the time of registration is no longer in question in this dispute. Justice Mactavish (as she then was) sided with the Plaintiff on this narrow issue in

summary judgment motions brought by these parties ( Milano Pizza Ltd v 6034799 Canada Inc , 2018 FC 1112 [ 2018

Summary Judgment ]). The validity of the Milano Design Mark, however, remained in issue at the trial of this matter, along with the Plaintiff’s claimed rights in the unregistered word marks MILANO PIZZERIA, MILANO PIZZA, MILANO’S PIZZA and MILANO’S [collectively, Milano Word Marks].

In these Reasons, I refer to all of the Plaintiff’s asserted trademarks together as " “Milano Marks” " including, for clarity, the Milano Design Mark. [ 4 ] As explained in greater detail below, the Plaintiff presently claims for trademark infringement, passing off, and depreciation of goodwill, while the Defendants counterclaim for expungement of the Milano Design Registration by reason of non-distinctiveness, abandonment, and non-entitlement.

In addition, the Defendants seek redress in their counterclaim for false or misleading statements allegedly made by the Plaintiff tending to discredit the Defendants’ business, goods or services, passing off, and making use by the Plaintiff of materially false descriptions that are likely to mislead the public as to the geographic origin of the goods and services ordered by the public. [ 5 ] For the reasons that follow, the Plaintiff’s action is dismissed, while the Defendants’ counterclaim for the expungement of the Milano Design Registration is granted pursuant to paragraph 18(1) (

b) of the Trademarks Act , RSC 1985, c T-13 [ TMA ]. The Plaintiff has failed to demonstrate sufficient controlled licensing of the Milano Design Mark, as contemplated by the TMA s 50(1), to justify maintaining the Milano Design Registration. The balance of the Defendants’ counterclaim otherwise is dismissed. [ 6 ] Shortly before the trial of this matter, the parties agreed to bifurcate the liability and damages issues. In light of the findings on the liability issues in this matter, however, the damages issues have been rendered moot in my view. II.

Factual Background [ 7 ] Justice Mactavish summarized the factual context, as well as the evidence and submissions the parties presented on their

summary judgment motions, which formed the backdrop for her analysis: 2018

Summary Judgment , above at paras 1-23, 42-82. Although overlapping with the

summary judgment factual context, what follows is a description of the background facts applicable to the trial of this matter, including a

summary of the parties’ evidence. For this background, I draw on the live and documentary evidence at trial, the

agreed partial statement of facts submitted by the parties, as well as the 2018

Summary Judgment .

(1) Parties [ 8 ] The Plaintiff/Corporate Defendant by Counterclaim, Milano Pizza Ltd. [Plaintiff or MPL] is an Ontario corporation incorporated on May 14, 1996 by the individual Defendant by Counterclaim, Marwan Kassis. [ 9 ] The individual Defendants by Counterclaim, Mazen Kassis, Marwan Kassis, Mahmoud Tabaja, and Joe Kassis (also known as " “Youssef” " Kassis) are all shareholders of MPL [collectively, Personal Defendants by Counterclaim].

Mazen Kassis has been the president of MPL since 2013. [ 10 ] The Defendant by Counterclaim, Milano Baseline, is a Milano Pizzeria store located at 2529 Baseline Road in Ottawa [Baseline Location], which opened in April 2016 and is owned and operated by Joe Kassis. [ 11 ] The Corporate Defendant/Plaintiff by Counterclaim, 6034799 Canada Inc. is a Federal corporation incorporated on November 6, 2002 [Corporate Defendant] by the individual Defendants/Plaintiffs by Counterclaim Chadi Wansa, Youssef Zaher and Yousef Nassar (also known as " “Joe” " Nassar) [collectively, Personal Defendants]. [ 12 ] There are several noteworthy familial relationships among the parties and others.

Mazen, Marwan and Youssef Kassis are brothers. Mahmoud Tabaja is married to a niece of Yousef Nassar, while Mahmoud’s brother, Mohammed Tabaja is married to Chadi Wansa’s sister. Chadi Wansa and Youssef Zaher are cousins, and Yousef Nassar is their uncle.

(2) MILANO PIZZERIA Business and Licences Granted by MPL [ 13 ] MPL is an Ottawa-based company that licenses independent pizzeria owner-operators. When MPL was incorporated in 1996, there were at least six pizzerias or stores offering take out restaurant services with delivery, in various locations under the name MILANO PIZZERIA and the Milano Design Mark. These locations were opened by Marwan Kassis but later were sold to other owner-operators.

By the time of trial, there were thirty-eight MILANO PIZZERIA stores run by independent owner-operators and licensed by MPL [MPL Licensees]. [ 14 ] Although the Defendants dispute the licensing aspect, I find that the above description represents the essence of the MILANO PIZZERIA Business, as demonstrated by the evidence, on a balance of probabilities.

Whether the licences granted are valid is a different issue that I address later in the Analysis. [ 15 ] The licence agreements were not always in writing but were agreed to verbally or were understood to involve " “purchasing” " and " “territory” " in exchange for use of the name " “Milano Pizza” " or " “Milano Pizzeria.” " More details emerge in the written licence agreements, and in the parties’ live evidence, described below. [ 16 ] Any written agreements that may have existed prior to the mid 2000s were destroyed in a flood in the home of Marwan Kassis where some MPL records were kept at the time.

The written licence agreements in evidence at trial do not cover all of the MILANO PIZZERIA stores that were licensed by MPL but do cover the majority of the licensed stores at the time when MPL commenced its action in 2017. The evidenced agreements are from 2008, 2012-2014, and 2016-2019. The bulk of the agreements are from 2013-2014 and 2017-2018, with only a small number from 2008, 2012, 2016 and 2019. None of these agreements states that it is nunc pro tunc or confirmatory of an existing licensing relationship.

Further, Mazen Kassis does not know whether Marwan Kassis had any written licences for the name prior to the flood in his home. [ 17 ] While not identical, the written agreements are substantially similar. Some identify the registered trademark as " “Milano Pizza,” " while others refer to " “Milano Pizzeria” " as the registered trademark, which then is defined as the " “Business Name” " that is licensed to the named MPL Licensee on a non-exclusive basis. Only one of the agreements (the most recent one from 2019) mentions the Milano Design Mark per se .

The rules or terms involve purchasing branded products from approved distributors or suppliers, and using the Business Name within an agreed upon territory. No other licence would be awarded or granted for that territory without the licensee’s consent.

Any further locations approved by the shareholders of MPL must enter into an agreement that replicates the licence agreements; that said, the licence agreements also provide, contradictorily, that the licence terms within the territory awarded by the MPL Licensee (and approved by MPL), shall be set at the sole discretion of the MPL Licensee. [ 18 ] The written licence agreements refer to " “License / franchise fees and royalties” " that the MPL Licensee (as opposed to MPL) would receive in the context of an approved second location in the MPL Licensee’s territory.

While some MPL Licensees paid a royalty to MPL in the early days, royalties were eliminated when MPL received rebates from the approved supplier Tannis (described below). The rebates initially were earmarked for joint advertising or promotion campaigns but eventually became MPL’s sole source of revenue.

MPL’s business model thus can be summed up as purchasing commitments by MPL Licensees and rebates received by MPL for the purchasing commitments. [ 19 ] Although not identified by name in the agreements, the designated suppliers are " “Tannis” " (that is, Tannis Food Distributors, now known as " “Sysco” " ) and Pepsi. The branded products provided by Tannis include pizza sauce, cheese, pepperoni, and pizza boxes, but do not include vegetables and accounting supplies. Early branded products involved designated third party products. MPL later developed its own line of private label products.

The pizza sauce, for example, is sold in cans labelled with the Milano Design Mark as follows:

[ 20 ] The written agreements also refer to a menu approved by MPL, taking the location into consideration, but in my view, there is insufficient evidence to demonstrate an approval process and little documentary evidence regarding the menus used in licensed MILANO PIZZERIA stores. In any event, the 2018

Summary Judgment holds that any copyright claim in the menus no longer is in issue (at para 153). [ 21 ] Pursuant to audit or review controls that, at best, can be described as " “ad hoc,” " Mazen Kassis demanded, in one instance, that a licensee remove Halal offerings from the menu.

As well, MPL relies on its Tannis representative to bring to MPL’s attention instances of non-compliance with the purchasing requirement (such as noticeable reductions in purchasing). [ 22 ] As admitted by Mazen Kassis and substantiated by the parties’ live evidence, the MPL Licensees otherwise are free to operate their businesses as they see fit, including store décor, advertising, staffing, uniforms, training, menu offerings (with limited exceptions, such as the one mentioned above) and pricing, and food preparation, including recipes used. [ 23 ] Store signage was patchwork in the early days among MPL Licensees until the Milano Design Mark was developed, the MPL Licensees agreed to adopt it, and Marwan Kassis changed the store signs for the MPL Licensees, at no cost to them, to signs displaying the Milano Design Mark.

The MPL Licensees also used the Milano Design Mark on their menus, after receiving a camera-ready version for such purpose, but each location had its own menu. Every MILANO PIZZERIA shop was different, with different combinations of pizza and different menu items.

As several of the witnesses testified at trial, however, including Chadi Wansa, it was beneficial to their businesses to be perceived as part of a larger group, or a " “franchise” " (even though a franchise – in the legal sense – has not been established to date), by using the Milano Design Mark. [ 24 ] The written licence agreements also refer to advertising and promotion campaigns from time to time that MPL and the MPL Licensees agree to make, but in practice, participation in the cooperative or joint campaigns that occurred was voluntary. [ 25 ] Online ordering is a significant feature of the MILANO PIZZERIA Business, with all MPL Licensees depending on the sales generated through the website platform at www.milanopizzeria.ca, including the supporting software and mechanism supplied by menu.ca (that is, Local Media Concepts Inc.) that enables the MPL Licensees to accept online orders.

Further details about how online ordering features in these proceedings are provided under the next heading.

(3) Baxter Location [ 26 ] Since 2002, the Defendants have owned and operated a MILANO PIZZERIA store on Baxter Road in Ottawa [Baxter Location]. As described below, they purchased the business from Vahid and Farid Khorrami [Khorrami brothers]. It was an asset purchase that included the equipment, leasehold improvements, and goodwill. They subsequently moved to a nearby location, still on Baxter Road.

For clarity, the term Baxter Location means the Defendants’ business in either location. [ 27 ] Marwan Kassis and Youssef Kassis acquired the Baxter Location in 1992 and sold it to Kamal Ibrahim in 1994 who in turn sold 50% of the business to Vahid Khorrami in 1995. Vahid later brought in his brother, Farid with whom he ran the business, after purchasing the remaining 50 per cent. Together, they set up the company 1252106 Canada Inc.. [ 28 ] During the time when Vahid Khorrami owned 50% of the business with Kamal Ibrahim, he learned Mr. Ibrahim was paying a monthly fee for the use of the Milano name.

After the Khorrami brothers bought the remaining 50% of the business from Kamal Ibrahim, they continued paying the monthly fee for a little while to use the Milano name. The Khorrami brothers also continued making purchases from Tannis, but otherwise they made business decisions for their location without any assistance from MPL during the " “trial-and-error” " phase of their business. [ 29 ] Chadi Wansa approached Vahid Khorrami in 2002 about purchasing the business. Mr. Wansa worked at the Baxter Location before purchasing it to learn the business. Although initially reluctant to sell the business to Mr.

Wansa, Mr. Khorrami changed his mind upon learning there was no MILANO PIZZERIA Business structure and agreed to sell the business to the Corporate Defendant. [ 30 ] The evidence confirms that there was no involvement of MPL in the actual sale, in terms of the purchase documents prepared to effect the transfer of the business to the Defendants. In other words, MPL was not a party to the transaction. This is consistent with the evidence of one of the Personal Defendants, Youssef Nassar, who previously owned a MILANO PIZZERIA store in Russell, Ontario.

His niece’s husband, Mahmoud Tabaja, approached him in early 2000 about buying the operation. According to Mr. Nassar, MPL owned the building and had to sign off on the lease, but otherwise, it was not involved with the purchase. [ 31 ] No trademark clearance search was conducted when the Corporate Defendant acquired the business from the Khorrami brothers. Although the asset purchase included the goodwill, there is no mention in the Bill of Sale, and related documentation in evidence, of any

trademarks. Further, the Bill of Sale avers that the " “said goods [namely, the equipment, leasehold improvements and goodwill] are free and clear from any and all encumbrances.” " [ 32 ] None of the purchase documents required the Corporate Defendant to enter into a licence agreement with MPL, nor had 1252106 Canada Inc. been subject to any written licence agreement restrictions regarding its use of the names Milano, Milano Pizza and Milano Pizzeria. None of the written licence agreements in evidence covers the Baxter Location.

From the Defendants’ point of view, the MILANO PIZZERIA locations are a somewhat loosely organized cooperative formed for the purposes of funding marketing campaigns, and for joint purchasing from suppliers; this is the structure that always had been in place. [ 33 ] Nonetheless, Tannis was a significant supplier for the Baxter Location until 2016. Although Mr. Wansa attempted to characterize the Defendants’ continued purchasing from Tannis after their acquisition of the Baxter Location as a " “gesture,” " I find this unpersuasive.

For example, Youssef Nassar recalled it was possible meeting with Marwan and Mazen Kassis in 2007 to discuss a decline in purchasing from Tannis because they could buy products cheaper elsewhere. After the meeting, the Defendants’ decline in purchasing from Tannis reversed. [ 34 ] The Defendants also complied with their territory. Mr. Nassar recalled that Vahid Khorrami gave them a map that was on his cooler outlining the territory for the Baxter Location. Mr. Nassar also recalled that he believed he had Marwan Kassis sign the map. Mr. Wansa testified that the map is displayed on what now is their walk-in cooler.

A copy of the signed map was produced at trial. Further, the Defendants’ territory changed over time; Marwan Kassis agreed to add Centrepointe to the Baxter Location territory, in exchange for the Defendants agreeing to use a centralized phone number. [ 35 ] In 2003, Chadi Wansa acquired the domain milanopizzeria.ca and hired a web designer to create and set up a website. About nine locations eventually joined the Baxter Location in advertising on the website.

When online ordering platforms came along starting in about 2010, with Just Eat, followed by Skip the Dishes and later Uber Eats, the Baxter Location jumped on. All of this was done without any input or oversight by MPL. Online ordering became a significant part (about 25%) of the Baxter Location’s business. [ 36 ] From 2002 until 2013, Mr. Wansa had a friendly relationship with Mazen Kassis. Relations deteriorated after Mr. Kassis became the president of MPL in 2013. At that time, they discussed transferring the milanopizzeria.ca domain to Mr. Kassis. Mr. Wansa agreed to the transfer after Mr.

Kassis assured him that the Baxter Location would not be removed from the website for any reason without Mr. Wansa’s consent. Mr. Kassis attempted to have Mr. Wansa sign an " “Agreement of Non-Abuse of proprietary Trade name, Trademarks. [ sic ] and The Milano Pizza Brand” " which references the agreed upon transfer of the domain name, among other terms, but there is no evidence that it ever was signed. Mr.

Kassis eventually had the domain transferred with the assistance of a domain service provider. [ 37 ] Contrary to the assurances given to the Baxter Location, it was removed from the website and online ordering system, first in November 2015 over refusal to buy a certain size of Pepsi, and then permanently in February 2016 over refusal to purchase pizza boxes (that display the domain milanopizza.ca, a second, related domain owned by MPL). At the end of June 2016, MPL’s counsel sent a letter to Mr.

Wansa at the Baxter Location formally terminating permission to use MPL’s trademarks in association with takeout restaurant services and related food offerings. [ 38 ] In the meantime, the Baseline Location, owned and operated by Joe Kassis, opened in April 2016. Facebook listings for the Baseline Location have included the description " “Milano Baxter – Iris Cobden.” " Further, the menu for the Baseline Location in evidence contains a note addressed generally to the MPL customer from Mazen Kassis, President MPL.

The note describes Joe Kassis as " “one of two brothers who founded the Milano Pizza franchise.” " It also mentions the opening of a second location in the area but leaves the reason for doing so unanswered. A letter to " “Milano Pizza Ltd.

Customer” " contains similar content and, in addition, describes that " “we are having grave issues with the location that has until now, been serving our Milano Pizza brand to your dining room table.” " [Emphasis in original.] [ 39 ] As a consequence of these developments, the Defendants acquired the domain milanoottawa.com, as well as ottawamilano.com, and launched their own website to restore online ordering for the Baxter Location.

In addition, from about the end of June 2016 to the present, the Corporate Defendant has used the trademark shown below in association with goods and services offered and sold by the Baxter Location: [New Milano Design] [ 40 ] Notwithstanding the adoption of the New Milano Design, the Defendants continue to use signs, menus and social media advertising displaying the Milano Design Mark or a substantially similar variation of the trademark, such as with the word PIZZERIA dropped but with the design elements of the stylized word MILANO maintained. [ 41 ] Also from about the end of June 2016, Tannis no longer is a significant supplier to the Corporate Defendant, which, since then, has purchased pizza ingredients from other suppliers.

Prior to at least mid-2015, Tannis was the Corporate Defendant’s primary supplier for pepperoni, pizza sauce and cheese.

(4) Third Party PIZZERIA MILANO in Masson, QC [ 42 ] Dimitrios Stougianos has operated PIZZERIA MILANO in Masson, Québec for the last 40 years. Masson is located about 30 minutes from Ottawa by car. The following is the sign on display in a front window of the restaurant which is open 7 days per week:

[ 43 ] The word PIZZERIA MILANO are in the colour red, while the background colour is yellow. The sign also has a red border. [ 44 ] In addition, Mr. Stougianos has been using the same menu for 40 years. It depicts the words " “Pizzeria Milano Restaurant,” " with the words Pizzeria and Restaurant in green letters and the larger word Milano in red letters, as shown below: [ 45 ] Mr. Stougianos testified that his restaurant sells more pizzas than other items, and he offers delivery to the Masson area.

The name of his business, as it appears on receipts for food orders, is " “Pizzeria Nouveau Milano.” " This always has been the name of his business. When asked how customers refer to his business, he answered " “Milano Pizzeria.” "

(5) Parties’ Live Evidence [ 46 ] Although the above paragraphs capture the more salient facts from the live evidence in these proceedings (and some of the documentary evidence), a

summary of the testimony of the witnesses at trial can be found in Annex " “A” " below.

(6) Prosecution History Regarding the Milano Design Registration [ 47 ] The underlying application to register the Milano Design Mark was filed on October 6, 1997 under number 857,952 in the name of MPL and took more than five years to proceed to registration.

During that time, MPL amended the application to include a disclaimer of the word PIZZERIA, and to redefine the services as " “take out restaurant services, with delivery.” " At no point was the application amended to identify a predecessor in title, even though the claimed date of first use, March 1994, precedes the date of MPL’s incorporation, May 14, 1996, by more than two years. [ 48 ] MPL also responded to the objection raised and maintained by the Registrar of Trademarks [Registrar] in successive official actions to the registrability of the Milano Design Mark, under the TMA s 12(1)(d), on the basis of confusion with the registered trademark MILANO, registration number TMA380,997 for " “restaurant and dining facilities serving Italian food, Western food and seafood.” " [ 49 ] MPL’s responses to this registrability objection contained notable admissions, including that " “‘Milano’ is actually a common trade term in association with restaurants and cafés in Canada.” " In support, MPL pointed to the coexistence of the prior, registered trademark MILANO EXPRESS & Design, registration number TMA267,423, that was considered by former Justice Cullen in Milano Dining Room & Lounge Ltd. et al. v Milano Express (Medicine Hat) Ltd . (1987), 15 CPR (3d) 272 (FCTD) [ Milano Dining Room ] .

At page 274 of the decision, Justice Cullen observed that " “Milano,” " a city in Italy, is a geographically descriptive term, and " “[i]f merely a geographic name with no secondary meaning, it cannot be monopolized and remains in the public domain, by virtue of its geographical significance.” " [ 50 ] I infer from the fact of the Milano Design Registration that the Registrar eventually approved, advertised, and allowed the application. The file history in evidence is incomplete in this regard. I note, however, that there is no evidence that any third party opposed the registration of the Milano Design Mark.

(7) Other Third Party MILANO Marks [ 51 ] The documentary evidence in this matter includes file histories for the following trademarks: - MILANO COFFEE HOUSE design, registration number TMA836,464, for goods and services that include the " “operation of restaurants” " ; - MILANO FRUITERIE LOGO TRADEMARK, allowed application number 1,703,103, for goods and services that include " “restaurant and catering services” " ; - MILANO English logo, allowed application number 1,753,787 for goods and services that include " “restaurant and catering services.” " III. Procedural History [ 52 ] The following is a

summary of the 4-year procedural history leading to the trial of this matter in February 2021.

[ 53 ] The Plaintiff filed its Statement of Claim on January 31, 2017 claiming: declaratory and injunctive relief against the Defendants regarding alleged infringement of the Plaintiff’s exclusive right to the Milano Design Mark by reason of the Milano Design Registration, passing off, depreciation of goodwill, and copyright infringement; an order for delivery up of offending material; an order requiring the Defendants to transfer to the Plaintiff the domain name milanoottawa.com and any other relevant domain name; damages or an accounting of profits; aggravated, punitive, and exemplary damages; pre- and post-judgment interest; and solicitor-and-client costs.

The Statement of Claim was amended just before trial on January 8, 2021. [ 54 ] The Defendants filed their Statement of Defence and Counterclaim on June 2, 2017, claiming: enumerated damages for the Plaintiff’s removal of the Defendants from the online ordering system found at www.milanopizzeria.ca, and additional damages for other business disruption and confusion caused by the Plaintiff/Defendants by Counterclaim; declaratory and injunctive relief regarding alleged invalidity of the Milano Design Registration pursuant to the TMA s 18, false and misleading statements, and descriptions that were false in a material respect, made by the Plaintiff/Defendants by Counterclaim contrary to the TMA s 7(

a) and s 7(d)(ii), and passing off; an order for delivery up of offending material; aggravated, punitive and exemplary damages; solicitor-and-client costs; and pre- and post-judgment interest. The Statement of Defence and Counterclaim was amended on July 28, 2017 and again shortly before trial on January 5, 2021. [ 55 ] The Plaintiffs’ Reply and Defence to Counterclaim was filed on August 11, 2017 and amended on January 8, 2021. The Defendants’ Reply to Defence to Counterclaim was filed on August 24, 2017. [ 56 ] The parties’ amendments to their pleadings flow, to a large extent, from the 2018

Summary Judgment , discussed in more detail below. IV. 2018

Summary Judgment [ 57 ] As noted, both sides of the dispute moved for

summary judgment. The Defendants sought to have the Plaintiff’s action dismissed, while the Plaintiff sought

summary judgment in its favour on all issues, except the copyright claim. Justice Mactavish found that there were no genuine issues for trial regarding the impugned registrability of the Milano Design Registration under the TMA s 18(1)(a), and regarding the Plaintiff’s copyright claim. The 2018

Summary Judgment issued for the Plaintiff on the first issue, but favoured the Defendants on the second issue resulting in the partial dismissal of the Plaintiff’s action to the extent that it was framed in copyright (at paras 6 and 155-156). The motions otherwise were dismissed (at paras 7 and 157). [ 58 ] In her analysis of the registrability issue, Justice Mactavish noted that the " “Plaintiff specifically disclaimed the use of the word ‘pizzeria’ in relation to the MILANO Design Mark, and it does not now claim ownership of the word ‘Milano’ per se, as a trade- mark or otherwise ” " [emphasis added]: 2018

Summary Judgment , above at para 95. In her view, the distinctiveness of the Milano Design Mark, as a whole, resides in the combination of the words " “Milano” " and " “Pizzeria” " , coupled with the design elements, namely " “the layout and font of the words, as well as the pizza slice appearing in the letter ‘O’ of ‘Milano’, which is the most distinctive element of the MILANO Design Mark” " : 2018

Summary Judgment , above at paras 96 and 99. [ 59 ] In reaching this distinctiveness conclusion in the context of the registrability analysis, Justice Mactavish referred to the decision in Milano Dining Room , and noted the combination of the words " “Milano” " and " “Express,” " coupled with a train logo [Milano Express Mark] which mark was upheld.

Although not stated expressly, I find that Justice Mactavish impliedly analogized the format of the Milano Design Mark here, to that of the Milano Express Mark. [ 60 ] In concluding that there was a genuine issue for trial in respect of Plaintiff’s passing off claim (and others), Justice Mactavish noted that the existence of a registered trademark is a complete defence to an action for passing off: 2018

Summary Judgment , above at para 133 . [ 61 ] In dismissing the Plaintiff’s copyright claim, Justice Mactavish noted the lack of evidence establishing the creation and provenance of the Milano Design Mark. In particular, even assuming that Marwan Kassis authored the Milano Design Mark, evidence of which was considered " “vague, non-specific, inconsistent and incomplete,” " there was no evidence he ever assigned his alleged copyright to the Plaintiff: 2018

Summary Judgment , above at paras 148-150. The Plaintiff thus failed to establish any enforceable copyright rights in the Milano Design Mark. Justice Mactavish also found at para 153 that the Plaintiff failed to establish enforceable rights in the menus. V. Dispute and Issues [ 62 ] Both the Plaintiff and the Defendants allege that the activities of the other party(ies) have caused confusion in the marketplace and harmed their respective businesses.

While the parties agree that customers in the Ottawa area have come to know the MILANO PIZZERIA operations of the independent owner-operators as, interchangeably, MILANO, MILANO’S, MILANO PIZZA, MILANO’S PIZZA, and MILANO PIZZERIA, neither the Plaintiff nor the Defendants presented direct evidence of the perceptions of their customers, or of other third parties, in this regard. [ 63 ] Further, for their part, the Defendants challenge whether MPL or any predecessor in title has licensed any of the MILANO PIZZERIA owner-operators.

A key issue of the dispute, in my view and as discussed further below, is whether the Plaintiff has demonstrated sufficient controlled licensing within the meaning of subsection 50(1) of the TMA . A determination on this point, in the larger context of distinctiveness, is a necessary antecedent to a consideration of the validity of the Milano Design Registration, which the Defendants challenge in their counterclaim. [ 64 ] Based on the parties’ pleadings and the above factual background, I find that the liability phase of the trial raises the following issues: A.

With respect to the alleged invalidity of the Milano Design Registration:

(

a) Whether, as of the date of the Defendants’ counterclaim, namely June 2, 2017, the Milano Design Mark was distinctive of MPL in association with take out restaurant services, with delivery, and if not, whether the registration is invalid under the TMA s 18(

b) for at least one of two possible reasons, namely: (

i) whether MPL’s licensing program is valid under the TMA s 50(1) such that use of the Milano Marks by the MPL Licensees enures to MPL’s benefit, and if not, whether this renders the Milano Marks non-distinctive; and/or (ii) whether the co-existence of other third party MILANO marks/operations, such as PIZZERIA MILANO of Masson, QC, renders the Milano Marks non-distinctive; (

b) Depending, in part, on whether MPL’s licensing program is valid, whether MPL abandoned or intended to abandon the Milano Design Mark, as contemplated by the TMA s 18(c); (

c) Whether the Milano Design Mark was used under licence at the time the application for its registration was filed on October 6, 1997 or its claimed first use date of March 1994, failing which the registration would be invalid under the TMA s 18(d); (

d) Whether the Milano Design Registration is invalidated because the claimed first use date of March 1994 precedes the incorporation date of May 14, 1996 of MPL but the registration does not identify any predecessor in title; (

e) Whether the Corporate Defendant’s predecessor in title used the Milano Design Mark prior to the claimed first use date of March 1994; (

f) Whether the lack of a disclaimer of the word MILANO in the Milano Design Registration invalidates the registration, or whether, alternatively, the registration can be amended to incorporate a disclaimer of the word MILANO in addition to PIZZERIA; and (

g) Whether MPL has enforceable rights in the registered Milano Design Mark (and/or the Milano Word Marks) to sustain its claims that the Defendants have contravened the TMA sections 19 , 20 , 22 , 7 (

b) and/or 7(c); B. Whether the Defendants have made any unauthorized use of the registered Milano Design Mark, either before or after any alleged licence or permission to use it ceased in June 2016, in contravention of the TMA s 19; C. Whether the New Milano Design Mark and the Milano Word Marks, as used by the Defendants, are confusing with the registered Milano Design Mark, such that their unauthorized use constitutes infringement under the TMA s 20; D.

Whether the Defendants’ unauthorized use of the Milano Marks and the New Milano Design Mark has depreciated MPL’s goodwill in registered the Milano Design Mark in contravention of the TMA s 22; E. Whether the Defendants, by using the Milano Marks and the New Milano Design Mark without MPL’s authorization, have passed off their goods and services as and for those of MPL in contravention of the TMA sections 7 (

b) and 7 (c); F. Whether the Personal Defendants should be liable for any unlawful acts of the Corporate Defendant; G. Whether the actions and communications of MPL and the Personal Defendants by Counterclaim to the Defendants’ third party suppliers, service providers, and/or their customers, on the milanopizzeria.ca website and elsewhere, constitute: (

a) making false or misleading statements tending to discredit the business, goods or services of a competitor, in contravention of the TMA 7 (a); (

b) directing public attention to their goods, services or business in such a way as to cause or be likely to cause confusion in Canada, at the time they commenced so to direct attention to them, between their goods, services or business and the goods, services or business of the Defendants, in contravention of the TMA s 7(b); (

c) passing off their goods or services as and for those ordered or requested, in contravention of the TMA s 7(c); (

d) making use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to their geographical origin, in contravention of the TMA s 7(d)(ii); and H. Whether the Defendants have used the trademark MILANO BAXTER and acquired any reputation or goodwill in said trademark. VI. Relevant Provisions [ 65 ] See Annex " “B” " below. VII. Analysis [ 66 ] I begin my analysis by noting that the version of the TMA that existed prior to the implementation of substantial changes on June 17, 2019 is applicable to my consideration of this matter. A. Is the Milano Design Registration Invalid?

[67] For the reasons explained below, I find Defendants have met their onus of establishing, on a balance of probabilities, that the MilanoDesign Mark is not distinctive and, hence, the Milano Design Registration is invalid under the TMA s 18(1)(b): Kirkbi AG v RitvikHoldings Inc., 2003 FCA 297 at para 80 , [2004] 2 FCR 241; aff’d 2005 SCC 65.

There are two principal reasons for findingnon-distinctiveness. [68] First, regardless of the existence of oral versus written licence agreements, MPL has not satisfied the onus on it to establish that itexercises sufficient control over the services performed (and goods sold) by the MPL Licensees such that MPL would benefit from thedeeming provision in the TMA s 50(1): Live! Holdings, LLC v Oyen Wiggs Green & Mutala LLP, 2020 FCA 120 at para 36.

In otherwords, the lack of control means that any use, advertisement or display of the Milano Design Mark (and the Milano Word Marks, for thatmatter) by the MPL Licensees does not enure, and has not enured, as of the date when the Plaintiff commenced its action, or as of thedate of the Defendants’ counterclaim, to the Plaintiff’s benefit. [69] I add that, given the proliferation and coexistence of independently owned and operated MILANO PIZZERIA locations, the use,advertisement or display of the Milano Design Mark (and the Milano Word Marks) has not enured to their benefit either in thecircumstances.

I address the latter point further below in the context of the Defendants’ counterclaim. [70] Second, the lengthy coexistence of PIZZERIA MILANO in Masson, QC undermines the distinctiveness MPL otherwise might haveenjoyed in the Milano Design Mark, and the Milano Word Marks, were they validly licensed. (

a) Invalidity under the TMA s 18(

b) for lack of distinctiveness (

i) Insufficient controlled licensing under the TMA s 50(1) [71] I am not satisfied that the Plaintiff has established sufficient controlled licensing in respect of the character or quality of the services"“take out restaurant services, with delivery”" in association with which the Milano Design Mark is used, advertised or displayed, so as tobenefit from the deeming provision under the TMA s 50(1). This case is less about inconsistent usage of the Milano Design Mark per se,although that has occurred as well (for example, by replacing PIZZERIA with milanopizza.ca).

Rather, the focus of the analysis is theMILANO PIZZERIA Business and the licences granted by MPL. [72] The Defendants/Plaintiffs by Counterclaim characterize this case as being "“unclear what was said and done, who said it, when wasit said, and who agreed to what.”" While I do not disagree, I find that as a result, there has been a significant focus in the trial of thismatter on form over substance. The lack of formal documentation in the early years of the MILANO PIZZERIA Business has resulted ina "“he said, he said”" situation (i.e.

Mazen Kassis on the one hand, and Chadi Wansa on the other hand) regarding the years prior to theimplementation of a more formulaic licensing program essentially in the mid 2010s. [73] In my view, this case instead can be characterized as a cautionary tale regarding the difficulties of proving, with the passage of time,both the subsistence and terms of an oral licence arrangement.

Further, as shown by some of the witnesses, there is a tendency of "“lay”"people (in the sense of those without legal training but with some legal advice) to discount or deny the existence of a licence or"“contractual”" terms, absent a formal written agreement. [74] In addition, I find that the background context described by Justice Mactavish in the 2018

Summary Judgment has not been clarifiedsignificantly through live testimony.

That said, in my view, the evidence at trial points, on a balance of probabilities, to the operation ofthe Baxter Location by the Khorrami brothers, with an unwritten understanding of permission (which is what a licence is, in essence) touse the "“Milano’s name”" (including the Milano Design Mark), in exchange for purchasing, respecting territory, and initially, a royaltypayment. [75] The above is borne out by Vahid Khorrami’s live testimony regarding his understanding of the applicable "“ground rules”" aboutTannis (i.e. purchasing from a designated supplier) and respecting the territory assigned to the Baxter Location.

He also testified on re-examination that he was paying a fee to Marwan Kassis for the use of the Milano’s name. It is not determinative, in my view, that therewas no formal MILANO PIZZERIA Business structure, that the licence agreements were not more precise, for example, about what wasregistered, that the parties to the licence agreements, at best, had just a general understanding of the terms, or that compliance wasimperfect.

The parties and their witnesses are business people, not lawyers. [76] Further, when testifying about his acquisition and operation of the Montreal Road location, Vahid Khorrami described a discussionhe had with Marwan Kassis where he confirmed that he would "“try to buy most of the stuff from Tannis still, and I said to respect thatagreement verbally we had in the beginning, and I respect that, and I just continue that.”" [Emphasis added.] Although Mr.Khorrami expressed reluctance to buy certain things that were not top quality, I find that, on a balance of probabilities, Mr.

Khorrami’stestimony overall points to an understanding that there was an oral licence arrangement in place regarding purchasing and territory inexchange for permission to use the Milano Marks. [77] I find the fact that MPL was not involved formally in the sale of the Baxter Location from the Khorrami brothers to the Defendantsor in the sale of other MILANO PIZZERIA locations, and together with MPL’s general "“hands off”" approach to the MPL Licensees,underscore the "“looseness”" of the licensing arrangements.

Ultimately, the lack of control exercised by MPL, as shown by the evidence,negatively affects the distinctiveness of the Milano Design Mark (and the Milano Marks generally), as I explain below. [78] The TMA s 50(1) deems the use, advertisement or display of a trademark by an authorized licensee to be that of the trademark ownerif the owner maintains, under licence, direct or indirect control of the character or quality of the goods or services in association withwhich the trademark is used, advertised or displayed.

A written licence agreement is not a requirement to establish licensed use of atrademark; evidence of the owner’s control over use can point to the existence of a licensing arrangement: Wells' Dairy, Inc. v U LCanada Inc., (FC) at para 38. [79] I note that the rebuttable presumption contemplated by the TMA s 50(2) does not apply in the circumstances because no evidencewas adduced that public notice was given that MPL is the owner of the Milano Design Mark and that it is used under licence.

[80] Depending on the circumstances, a well-structured franchise arrangement can involve the requisite degree of control to satisfy theTMA s 50(1): Boston Pizza International Inc. v Boston Chicken Inc., 2001 FCT 1024 at paras 56-57.

That said, "“…the fact thata franchisor has some control over its franchise is not sufficient on its own to show control over the character and quality of the services.Each case, however, has its own facts and despite the differences between the types of business relationships, the owner of the trade-mark must be able to evidence control over the licensee to meet the requirement under s. 50”": Fox on Canadian Law of Trade-marks and Unfair Competition, 4th ed., Gill, A. Kelly; Jolliffe, R.

Scott; Fox, Harold G. (Toronto: Carswell, c2002-) (looseleaf) [Fox on Trade-marks], citing (at page 15-24, footnote 96) Realestate World Services

(1978) Ltd. v Firstline Trust Co. (1997), 77 CPR (3d) 406(TMOB). [81] Notwithstanding the references to "“License/franchise fees and royalties”" in the licence agreements, and the possibility of MPLmaking "“an application to register Milano Pizzeria as a franchise”" in at least one of the licence agreements in evidence, MPL simply isnot a "“franchise”" as this term is defined in

section 1 of the Arthur Wishart Act (Franchise Disclosure), 2000, SO 2000, c 3. Amongother things, the MPL has not established that it exercises significant control or provides significant assistance, directly or indirectly, toMPL Licensees. The issue here, however, is whether MPL exercises sufficient control within the meaning of the TMA s 50(1) tomaintain the Milano Design Registration. [82] The Plaintiff argues that a licensee’s "“desired autonomy in the day-to-day administration of its affairs does not… equate with anabdication of control”": Stamos v Belanger, (ON SC) [Stamos] at para 64.

As Justice Walker observed more recently,"“[t]he lack of control by the Plaintiff of the Defendants’ day-to-day business operations is not fatal to the existence of a

section 50license”": Corey Bessner Consulting Inc. v Core Consultants Realty Inc., 2020 FC 224 [Corey Bessner] at para 78.

While I do notdisagree, I find that this is not of much assistance to the Plaintiff here in establishing sufficient control with regard to the MPL Licensees.Further, the unique circumstances at play in Stamos and in Corey Bessner make these decisions distinguishable, in my view, from thematter before me. [83] Stamos involved a dispute among members and former members of an international union and a local union, and a motion for aninterim injunction to restrain the defendants from using certain trademarks.

The Court in that case found compliance with the TMA s50(1) and a strong prima facie case of breach of contract by the defendants, having regard to the international union’s constitution andthe monitoring the international union undertook of all activities of its locals. [84] Corey Bessner involved a business arrangement between a trademark owner and two colleagues that fell apart.

While the proposedbusiness alliance included a term that the three business partners would own an equal share of the intellectual property, the trademarkowner did not agree to the proposal and the business alliance was not formalized in writing. While the trademark owner had beenprepared to move forward with the business alliance to see how it proceeded, it was short-lived, lasting about 1½ years. Further, thetrademark owner did not agree to co-ownership or assignment of the trademarks at issue.

Rather, the trademark owner maintainedphysical control over the trademarks through control of the relevant website, email and social media accounts. The control of thetrademarks was a determinative factor in the Court’s finding of a licence under the TMA s 50. [85] In the case before me, I find that MPL woke up late to the importance of the Internet and online ordering to the MILANOPIZZERIA Business.

I further find credible Chadi Wansa’s testimony that he acquired the domain milanopizzeria.ca, developed awebsite with the help of a website designer, hopped on the new online ordering platforms of the day, and encouraged the participation ofother locations, all without input or oversight by MPL for at least a decade from 2003 to 2013.

Relations between the parties started todeteriorate when MPL belatedly sought to control the domain, the website and eventually social media for the MILANO PIZZERIABusiness. [86] This element of control was solidified in the hands of MPL just under two years before the Defendants initiated their counterclaimchallenging the distinctiveness of the Milano Design Registration.

Although, in my view, online ordering is the Internet equivalent of acentralized telephone ordering system (which the MPL Licensees rejected years ago), I find it was "“too little too late.”" The Plaintiff hasmaintained consistently throughout the action that the essential terms of the licence are "“purchasing”" and "“territory.”" Onlineordering is not mentioned in the written licence agreements. Nor is it mentioned or inherent in the services "“take out restaurant services,with delivery”" listed in the Milano Design Registration.

This is not surprising given that the underlying application to register theMilano Design Mark was filed in 1997, in the early days of the Internet and long before the adoption of online ordering in the MILANOPIZZERIA Business. In addition, the evidence does not show that all of the independent owner-operators are obligated or have chosen toparticipate. [87] The authors of Fox on Trade-marks posit (at page 15-24) that there are two main issues regarding the sufficiency of control – thetype of control and whether it actually is exercised – and they point to a number of cases where control is in issue.

They suggest that acautious approach would be to "“have the license specifically provide for the owner’s control over the character and quality of the waresor services”" and "“the right to regular inspections, which the owner would actually exercise”":

Section 15.3(c)(ii) at pages 15-25 – 15-26. The licence agreements granted by MPL do not contain either such provision. [88] This Court has held that the lack of a clause providing for control of the quality of the wares in a licensing agreement, plus a lack ofevidence that the owner exercised direct or indirect control of the use of the mark by the licensee, and the absence of any other newmaterial evidence, was sufficient to reject an appeal from the Registrar’s decision expunging the trademark registration in issue: EclipseInternational Fashions Canada Inc. v Cohen, 2004 FC 617 at para 17.

In Tucumcari Aero, Inc. v Cassels, Brock & Blackwell LLP, 2010FC 267, (former) Justice Barnes found that a right of annual inspection and a right to terminate the applicable licence agreement in thecase of deficient products were indicative of sufficient control as required by the TMA s 50(1). [89] While the written licence agreements with the MPL Licensees provide MPL with the right to terminate in the event of breach, andobligate the MPL Licensees to sell products and menu items approved by MPL, they do not contain any right of inspection.

In addition,there is little evidence that MPL regularly inspects or approves products and menu items (apart from the one example of requesting theremoval of Halal items from a menu). [90] Many of the cases cited by the authors of Fox on Trade-marks deal with the adequacy of a corporate or similar relationship between

the trademark owner and the licensee(

s) in the context of controlled licensing. I find the following case, however, provides a usefuldiscussion germane to the issue here of controlled licensing. [91] In Flansberry Menard & Associates v RB Music Ltd. (2000), 7 CPR (4th) 569 (TMOB) [Flansberry], the Trademarks OppositionBoard found that the registrant failed to demonstrate the requisite

section 50 control, and ordered the challenged registration expungedfor non-use under the TMA s 45. In considering whether the registered trademark BACHMAN-TURNER OVERDRIVE was used duringthe relevant period with pre-recorded tapes, the Opposition Board Member found that while the trademark owner likely would have hadcontrol over the character and quality of the band’s master recordings, it failed to demonstrate how it exercised control over the characterand quality of the finished products which display the registered mark (that is, the tapes, records or compact discs produced from themaster recordings).

The Member noted specifically that the licence agreement did not contain a right to inspect and control the use of thetrademark to ensure that it was used properly, nor to obtain samples of the goods produced in connection with the trademark. [92] By analogy, I find that while MPL may control the character and quality of the branded pizza ingredients - pepperoni, cheese andsauce - that it requires the MPL Licensees to purchase from Tannis, in addition to the pizza boxes, MPL for the most part has failed toexercise control over the finished product, the pizza itself, and other menu items. [93] For example, Mazen Kassis testified that "“none of the other ingredients would affect the taste of the pizza more than the saucewould”" and agreed with counsel that "“by requiring your licensees to all use the Milano sauce, then that essentially makes – the key toall of their pizza all the same across all operators.”" On the other hand, Yousef Nassar testified that the dough is the most importantaspect of pizza, while other witnesses testified, including Chadi Wansa, Vahid Khorrami and Rania Yehia (a former owner-operator ofthe Montreal Road Location, and whose father is Chadi Wansa’s father-in-law), that they were free to use their own recipes.

In otherwords, there was nothing to prevent the taste of the sauce being altered by the addition of other ingredients, such as herbs and spices, orby its interaction in the cooking process with other ingredients, significantly the dough. Nor does MPL appear to have monitored in anymeaningful way, such as through periodic or regular sampling, the finished product, that is, the pizzas or any other food products on themenus of the MPL Licensees. [94] Mr.

Kassis also testified that "“the entire business is fluid”" and that "“licensees come to Milano, because they are relaxed licenceagreements with few requirements.”" [Emphasis added.] Further, Mr. Kassis confirmed that there are no uniforms.

Additions to themenu are allowed (such as Kemptville Pizza or Manotick Special) because "“it won’t affect the larger mark of company.”" The controlover the quality of the service being provided, in "“the early days, would have come through a supplier… a rep that would work for thedistributor… by the customers…, and by the licensees themselves.”" Mostly, however, controlling the service of a territory is out ofMPL’s hands once the territory has been assigned; the MPL Licensees would have to deal with territorial disputes on their own. [95] While MPL encourages higher pricing, it is neither compelled, nor uniform.

Instead, MPL Licensees have control over their pricing.MPL does not audit sales - Mazen Kassis testified that he just goes by experience or makes an educated guess. According to Mr. Kassis,apart from territory and purchasing, the MPL Licensees (that is, the MILANO PIZZERIA owner-operators) essentially control their ownoperations. [96] Based on the testimony of Mazen Kassis and having regard to the written licence agreements, apart from initially assigning aterritory to a licensee, I am not persuaded that MPL actually controls the territory, a key aspect of MPL’s licensing program.

This is aproblem for MPL because "“…s. 50(1) of the Act requires the owner of the mark, and not the licensed company, to have direct orindirect control of the character or quality of the wares or services in order for the use of a trade-mark by a licensee to be deemed to beused by the owner”": Facton Ltd v Diplomate Watch of Canada, 2012 TMOB 142 at para 59.

An exception might occur wherea licensing arrangement involves the delegation of control from the trademark owner to a "“head”" licensee or franchisee who in turnexercises control on behalf of the trademark owner (i.e. indirect control) over sublicensees or subfranchisees. That is not the case here,however. [97] The Plaintiff argues that the territories were assigned to optimize the speed and quality of delivery of the ordered food and, hence,represents an element of control of the Milano Design Registration services (that is, "“take out restaurant services, with delivery”").

I amnot satisfied, however, that this is meaningful control in the sense of sufficiency. First, territories are different sizes. Vahid Khorramitestified, for example, that the Montreal Road location was too large to be served effectively by only one MILANO PIZZERIA store.Youssef Nassar had a similar complaint regarding the Russell location. Mr.

Nassar also testified that timing of delivery is a key factor.Second, in the case of orders that are picked up, the size of the territory may have little, if any, impact on the speed with which an orderis filled. [98] Third, the evidence establishes that the MPL Licensees have control over the hiring and training of drivers. No evidence wasadduced on the speed at which delivery drivers drive or the routes they take (i.e. the timing of delivery mentioned by Mr. Nassar). Evenassuming they drive at posted speed limits, this is but one factor in the overall timing of order fulfillment.

For example, the MPLLicensees also have control over their operations. In other words, they control how the food is prepared, including the timing ofpreparation. They also control staffing and, thus, whether they have sufficient staff to meet demand at any given time and how quicklythey do so. [99] All of these factors, over which MPL exercises little to no control, are significant determinants, in my view, of the character orquality of the services, including the finished pizza products and the speed at which or how food orders are filled.

As noted in an earliercase, "“[n]ot only is the provision in that agreement as to the character of the hamburgers to be sold under the agreement of the mostsuperficial and unrestrictive character, but there is no provision for supervision or control and the evidence indicates that actual controlconcerning ‘nature and quality of the goods’ [or services, here] is practically speaking, non-existent”": Robert C. Wian Enterprises, Inc.v Mady, [1965] 2 Ex.

C.R. 3 at p 15. [100] The Plaintiff’s counsel objected, during Vahid Khorrami’s examination in chief, to the relevance of the line of questioningregarding the sale of the Baxter Location from the Khorrami brothers to the Defendants, having regard to the relevant date for assessingthe distinctiveness of the Milano Design Mark (i.e. as of the date of the Defendants’ Counterclaim dated June 2, 2017). Although there isa difference of about 15 years, apart from the development of private label branded pizza ingredients and the increased utilization of

written licence agreements, there is little evidence that much else has changed over the intervening years in respect of the actual exerciseof control by MPL over the character or quality of the applicable services. I base this observation on the testimony of several of theindependent owner-operators of MILANO PIZZERIA stores.

Further, as mentioned above, online ordering (and MPL’s belated control)is not a significant factor in this case, in my view. [101] I therefore conclude that the insufficient control exercised by MPL over the character or quality of the services, including thefinished food products, notwithstanding oral or written licence agreements with most of the MPL Licensees, renders the Milano DesignMark non-distinctive, and hence, the Milano Design Registration invalid, as of the date of the Defendants’ counterclaim, namely June 2,2017. [102] As a consequence, not only is the Milano Design Mark non-distinctive of MPL, its concurrent use by the MPL Licensees rendersthe Milano Design Mark non-distinctive of any one of them as well, in my view, particularly in the absence of any direct evidence ofacquired distinctiveness by either side to this dispute, notwithstanding lengthy use (about 20 years or more) of the Milano Design Markand one or more of the Milano Word Marks.

I explain the implications of the latter result further below in connection with theDefendants’ counterclaim.

This consequence does not apply, however, to the design elements of the New Milano Design. (ii) Lengthy co-existence of PIZZERIA MILANO in Masson, QC [103] I find the coexistence of PIZZERIA MILANO in Masson, Québec, undermines any acquired distinctiveness MPL otherwise mighthave enjoyed in the Milano Design Mark, and the Milano Word Marks, by reason of the TMA s 50(1), were it not for the uncontrolledlicensing that occurred. [104] Justice Mactavish found, as noted above, that the distinctiveness of the Milano Design Mark resides in the combination of thewords "“Milano”" and "“Pizzeria”", coupled with the design elements: 2018

Summary Judgment, above at para 96. This finding in myview relates to the inherent distinctiveness of the Milano Design Mark on its face, rather than possible acquired distinctiveness, which isnot mentioned in the registrability analysis. [105] I find, however, that the Milano Design Mark is an inherently weak mark, with the word PIZZERIA specifically disclaimed, andrights in the word MILANO disavowed by MPL (i.e.

"“‘Milano’ is actually a common trade term in association with restaurants andcafés in Canada”"), and the design of a slice of pizza descriptive of "“take out restaurant services, with delivery”" where the featured,finished product is pizza. (The lack of an express disclaimer of MILANO in the Milano Design Registration is discussed below.) [106] Further, I find that any distinctiveness that resided in the combination of the words MILANO PIZZERIA is extinguished by thecoexistence, and prior use, of PIZZERIA MILANO, by Dimitrios Stougianos for about 40 years.

The fact that the words are reverseddoes not add any meaningful, distinguishing feature between these marks or names; they mean essentially the same thing, and are similarin sound and appearance: Made in Nature, LLC v Pharmavite LLC, 2022 TMOB 21 at para 31; Allan Beverages Ltd. v CanadaDry Ltd., 1974 CarswellNat 489, 15 CPR (2d) 86 at 87-88 (Registrar of Trade Marks). [107] In addition, the Milano Design Mark and the PIZZERIA MILANO sign used by Mr.

Stougianos in the front window of hisrestaurant, involve the same eye-catching colours of red and yellow. [108] The Plaintiff sought to rely on the fact that Masson, QC is approximately 30 minutes away from Ottawa by car. I agree with theDefendants, however, that the PIZZERIA MILANO in Masson, QC is closer to Ottawa than a number of the MILANO PIZZERIAstores, including those located in Alfred, Almonte, Arnprior, Beachburg, Bourget, Casselman, Cobden, Cornwall, Kemptville, Pembroke,Perth, Renfrew and Smith Falls (according to the list, in evidence, of MILANO PIZZERIA locations as of August 2018).

As the SupremeCourt has held, "“for the owner of a registered trade-mark to have exclusive use of the trade-mark throughout Canada, there cannot be alikelihood of confusion with another trade-mark anywhere in the country”": Masterpiece Inc. v Alavida Lifestyles Inc., 2011 SCC 27 atpara 31 , [2011] 2 SCR 387. [109] During the trial, Mazen Kassis admitted he is aware that there are other restaurants in Ontario and Canada that use MILANO intheir name. Apart from this action, and an action against Milano City Pizza in respect of which MPL obtained default judgment (datedJune 23, 2016 on Court File No.

T-43-16), there is no other evidence that MPL has a program for policing the Milano Design Mark,including in respect of the PIZZERIA MILANO.

For example, the written licence agreements with the MPL Licensees do not containany provision obligating the licensee to bring to MPL’s attention any unauthorized, confusing uses of the Milano Design Mark or theMilano Word Marks by a third party. [110] In addition, regarding the third party marks evidenced by the Defendants, namely MILANO COFFEE HOUSE design, registrationnumber TMA836,464, MILANO FRUITERIE LOGO TRADEMARK, allowed application number 1,703,103, and MILANO Englishlogo, allowed application number 1,753,787, there is no evidence that MPL sought to oppose them.

I find, otherwise, that this evidence isof little assistance to the Defendants in their defence of the main action. In particular, there is an insufficient number of registered andallowed trademarks to draw any inferences regarding the state of the marketplace in respect of the asserted prevalent use of MILANO forrestaurant services: Tokai of Canada Ltd v Kingsford Products Company, LLC, 2021 FC 782 at paras 56-57.

I give greater weight in thisregard to the Plaintiff’s admission made during the processing of the application underlying the Milano Design Registration to the effectthat "“Milano”" is a common trade term in association with restaurants and cafés in Canada. (

b) Invalidity under the TMA s 18(

c) because of abandonment [111] I am not persuaded that the Defendants have established abandonment of the Milano Design Mark. There are two requirements toshow abandonment – first, that the trademark no longer is in use in Canada, and second, that the owner intended to abandon thetrademark: Diageo Canada Inc. v Heaven Hill Distilleries, Inc., 2017 FC 571 at para 43. [112] MPL itself does not use the Milano Design Mark for "“take out restaurant services, with delivery”" and has not done so for manyyears. It does use the Milano Design Mark, however, in association with private label pizza sauce. MPL asserts that pepperoni and

cheese are similarly private labelled; I note, however, that there are no images in evidence of the packaging for these food products. [113] Further, while I have found a lack of distinctiveness from insufficiently controlled licensing, the Plaintiff’s licensing program,imperfect as it is, does not support an intention to abandon the Milano Design Mark, in my view. I thus find that the two requirements forestablishing abandonment have not been met. (

c) Invalidity under the TMA s 18(

d) because of non-entitlement [114] Given my finding of invalidity for lack of distinctiveness, the question of whether the Milano Design Mark was used under licenceat the time the application for its registration was filed on October 6, 1997 or as of its claimed first use date of March 1994 for the mostpart no longer is relevant.

I agree with the Plaintiff, however, that the TMA s 17(1) operates to preclude the Defendants from succeedingon this ground of invalidity. [115] I note that the evidence shows the Baxter Location was acquired in 1992 by Marwan and Youssef Kassis, and they owned it until1994 when they sold it to Kamal Ibrahim. As observed by Justice Mactavish, "“Marwan Kassis (one of the Defendants by Counterclaim)identifies himself as the founder of the Milano pizzeria business”": 2018

Summary Judgment, above at para 13.

Although Marwan andYoussef Kassis were shareholders of MPL, there is no evidence about whether their initial interests in the MILANO PIZZERIA Businessflowed to MPL. [116] By the time the application to register the Milano Design Mark was filed in 1997, the Khorrami brothers owned the BaxterLocation, through their numbered company, and as I have found, they used the Milano Design Mark with permission (that is, under anoral licence), in exchange for purchasing and respecting territory. [117] Further, while the Bill of Sale for the purchase of the Baxter Location by the Defendants mentions goodwill, it is silent about anytrademarks, trademark rights, trade names or other intellectual property, as noted by Justice Mactavish: 2018

Summary Judgment, aboveat para 73. In light of the TMA s 48(1), however, I am not prepared to infer that trademarks follow goodwill. Subsection 48(1) providesthat registered or unregistered trademarks are transferrable, either with or separately from the goodwill of the business. In other words,subsection 48(1) recognizes a commercial reality that a business and its goodwill can be sold with or without the trademark(

s) that thebusiness used. [118] Consequently, while the Defendants in my view are the successors to the business operated by the Khorrami brothers at the BaxterLocation, I find that they are not the successors to any trademark rights that would permit them, under the TMA s 17(1), to challenge thePlaintiff’s entitlement to the Milano Design Mark, notwithstanding that the Milano Design Registration is more than five years old:Havana House Cigar & Tobacco Merchants Ltd. v Skyway Cigar Store, (FC) at para 61; varied (in other respects) (FCA). (

d) Invalidity because claimed first use date precedes incorporation date [119] There is no question that under the TMA, as it existed prior to June 17, 2019, this would have been a valid basis for opposing atrademark application, with regard to paragraphs 38(2)(

a) and 30(b). The law is less clear, however, whether a registration could beexpunged under the TMA s 18 on that basis (i.e. non-compliance with

section 30 which is not mentioned in

section 18, unlike the formerparagraph 38(2)(a)). [120] In any event, the Defendants did not address or maintain this issue in their closing arguments. In light of my finding of invalidityfor lack of distinctiveness, I conclude it is unnecessary to make a determination regarding this issue. (

e) Whether Corporate Defendant’s predecessor used the Milano Design Mark prior to March 1994 [121] As I have found above, while the evidence shows that 1252106 Canada Inc., the Khorrami brothers’ numbered corporation, is theCorporate Defendant’s predecessor in so far as the business operated at the Baxter Location is concerned, 1252106 Canada Inc. is not apredecessor in my view of any trademarks or trademark rights that the Defendants allege they hold. I therefore conclude it also isunnecessary to make any other determination in connection with this issue. (

f) Invalidity because of lack of disclaimer of MILANO [122] Again, given the finding of invalidity for lack of distinctiveness, this issue has become moot. That said, were I to consider theissue, I would be inclined to the view that the Defendants’ complaint regarding the lack of a disclaimer in this case is tantamount to animpermissible collateral attack against the registrability finding in the 2018

Summary Judgment. [123] The Defendants have not articulated clearly, in my view, the statutory basis on which they seek to have the Milano DesignRegistration declared invalid for lack of a disclaimer of MILANO or, alternatively, to have the Milano Design Registration amended toincorporate the disclaimer. I find that the Defendants’ complaint about the lack of a disclaimer of MILANO appears to be rooted in theregistrability of the Milano Design Mark, which Justice Mactavish found is not in issue. I note that neither party appealed the 2018Summary Judgment. Further, both sides of the dispute were expected to have "“put their best foot forward”" in their respective motionsand responses: 2018

Summary Judgment, above at paras 34-35. [124] As Justice Gleason (as she then was) observed, "“[t]he rule against collateral attack prevents parties from questioning an ordermade by a court of competent jurisdiction in any other proceeding except through the appeal process applicable to the order”":Strickland v. Canada (Attorney General), 2013 FC 475 at para 43. The Supreme Court defines a "“collateral attack”" as "“an attackmade in proceedings other than those whose specific object is the reversal, variation, or nullification of the order or judgment”": Wilsonv The Queen, (SCC), [1983] 2 SCR 594 at 599.

[125] For this reason, I find that the Defendants’ reliance on the decision in Emall.Ca Inc (Cheaptickets.Ca) v Cheap Tickets and TravelInc., 2007 FC 243 [Cheap Tickets], in respect of this issue, misplaced. The Cheap Tickets decision turned on the question of whether thechallenged trademarks were descriptive and, hence, whether they were registrable. [126] For the above reasons, I would have concluded that the Defendants could not succeed on this issue. (

g) Enforceable rights in the registered Milano Design Mark (and/or the Milano Word Marks) [127] Given my finding of lack of distinctiveness, because of insufficiently controlled licensing, I conclude that the issue of whetherMPL has enforceable rights in the registered Milano Design Mark (and/or the Milano Word Marks) to sustain its claims that theDefendants have contravened the TMA sections 19, 20, 22, 7(

b) and/or 7(

c) must be answered in the negative for all of the Plaintiff’sasserted Milano Marks. The TMA s 50(1) applies to both registered and unregistered trademarks. [128] If my finding were not sustainable, however, I would have considered the Defendants’ ongoing use of the exact and otherwisevalidly registered Milano Design Mark, after MPL’s termination of permission to use it (or in the absence of such permission), to be abreach of at least sections 19 and 20 of the TMA.

The evidence demonstrates that the Milano Design Mark was not removed from theDefendants’ website until 2018, and is still on a sign at the Baxter Location. The Defendants also admitted using substantially theMilano Design Mark on their latest menu from 2019. [129] In any event, I add that the issue of whether the Milano Design Mark is nonetheless distinctive of MPL for the privately-labelledpizza ingredients (i.e. pizza sauce, pepperoni and cheese), or, in other words, the goods it sells through Tannis, was not asserted orargued in the Plaintiff’s claim or the Defendants’ counterclaim.

Further, there was no evidence that anyone other than MPL sells suchgoods. It is not an issue I need to determine and, thus, is not a factor in these Reasons. [130] In the circumstances, I find it unnecessary to consider issues B, C, D, E and F above, leaving issues G and H for consideration, towhich I turn next. G. Actions and communications of MPL and the Personal Defendants byCounterclaim (

a) Have MPL and the Personal Defendants by Counterclaim made false or misleading statements tending todiscredit the business, goods or services of the Defendants, in contravention of the TMA s 7(a)? [131] I find that the Defendants have not made out their counterclaim of contravention of the TMA s 7(

a) by MPL and the PersonalDefendants. [132] The parties do not disagree about the elements required to succeed in a claim under this provision, namely (1) a false andmisleading statement, (2) tending to discredit the business, wares or services of a competitor, and (3) resulting damage: S. & S. IndustriesInc. v Rowell, (SCC), [1966] SCR 419 at 424. [133] The Defendants assert, in their Reply to the Defence to Counterclaim, however, that the alleged deceptive and misleading actionsby the Defendants by Counterclaim with respect to

section 7 breaches "“stand independently of any determination regarding theownership of the trade-marks at issue.”" I disagree. [134] As I previously have held, "“[t]here is a constitutional limitation on

section 7, in that standing alone and in association only with(now)

section 55, it would not be valid federal legislation under subsection 91(2) of the British North America Act; the

section derives its‘nourishment’ or validity from rounding out the regulatory schemes prescribed by Parliament exercising its legislative power in respectof patents, copyrights, trademarks and trade names”": Immigration Consultants of Canada Regulatory Council v CICC The College ofImmigration and Citizenship Consultants Corp., 2020 FC 1191 at para 62, citing MacDonald et al v Vapor Canada Ltd, (SCC), [1977] 2 SCR 134 [Vapor] at 172. [135] The Supreme Court in Vapor stated further at 172: "“The subparagraphs of s. 7, if limited in this way, would be sustainable.”" TheSupreme Court, thus, concluded that paragraph 7(

e) was not sustainable (and hence, it later was repealed) because there was no subjectmatter left in relation to patents, copyright, trademark and trade names, once paragraphs 7(

a) to 7(

d) were taken into account. [136] Regarding the TMA s 7(

a) specifically, this Court has held, "“[f]or

section 7(

a) to be valid, its application must be limited tocreating a cause of action relating to false and misleading statements made about a trade-mark or other intellectual property owned by theclaimant”": Canadian Copyright Licensing Agency v Business Depot Ltd., 2008 FC 737 [Canadian Copyright] at para 27. As I explainbelow in connection with issue H, to the extent the that Defendants base this claim on alleged rights in MILANO BAXTER, theDefendants have not established that they have used MILANO BAXTER as a trademark within the meaning of

section 4 of the TMA, oras trade name for that matter. [137] The Defendants point to email exchanges in early 2017 between the Plaintiff and two suppliers regarding online order fulfillment,Just Eat and Uber, as well as to the testimony of Chris Bouziotas of Local Media Concepts Inc., doing business as menu.ca, in support oftheir assertion that the Plaintiff (including the Personal Defendants by Counterclaim) made false or misleading statements tending todiscredit the business, goods or services of a competitor, contrary to the TMA s 7(a). [138] I find the email exchange with Uber to be factual for the most part, while the email exchange with Just Eat is inconclusive.

In bothcases, the representative of the supplier apparently sought information about the dispute between MPL and the Baxter Location, towhich MPL’s counsel responded in the case of Uber and Mazen Kassis responded in the case of Just Eat. [139] In response to Uber, MPL’s counsel forwarded a copy of the Milano City Pizza judgment and a copy of the Statement of Claim

filed naming the owner-operators of the Baxter Location as Defendants and "“alleging infringement of our client’s exclusive rights in thetrademarks MILANO PIZZERIA, MILANO PIZZA … and MILANO PIZZERIA & Design…”" Although in my view it was anoverreach to assert exclusive rights in MILANO PIZZE

[…]