Ontario Court refuses jurisdiction over non-resident trademark licensor

April 28, 2009

In October 2008, the Ontario Superior Court of Justice confirmed that a foreign entity that merely licenses its Canadian trademarks in Ontario is not sufficiently connected to Ontario for an Ontario court to assume jurisdiction over the licensor.

The case of Charron v. Bel Air Travel Group Ltd. [(2008) 92 O.R. (3d) 608] arises from the unfortunate death of an Ontario man, which occurred while he was scuba diving at an all-inclusive vacation resort in Cuba.  His wife and children brought the claim in Ontario against numerous defendants, including the travel agent and tour operator, which were based in Ontario (the Canadian defendants); the owner of the Cuban resort and several employees of the resort (the Cuban defendants); the operator of the Cuban resort, which arranged to market the resort in Canada (Operator Defendant); and the licensor of the trademarks under which the resort operated (Licensor Defendant). Both  the Operator Defendant and the Licensor Defendant  are companies incorporated in the Cayman Islands.

The Operator Defendant and the Licensor Defendant defended against the claim by arguing that the courts of Ontario did not have jurisdiction or were forum non conveniens. The test for considering whether an Ontario court can maintain jurisdiction over a defendant not present in, or consenting to, the jurisdiction of the court, is whether the defendant has a "real and substantial connection" to Ontario. The Court evaluated this question on the basis of eight factors drawn from earlier cases: 

  1. the connection between Ontario and the plaintiff's claim;
  2. the connection between Ontario and the defendants;
  3. unfairness to the defendant in assuming jurisdiction;
  4. unfairness to the plaintiff in not assuming jurisdiction;
  5. involvement of other parties to the suit;
  6. the court's willingness to recognize and enforce a similar judgement against a domestic defendant rendered on the same jurisdictional basis;
  7. whether the case is international or interprovincial in nature; and
  8. comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.

The Court's evaluation of these factors in considering the Licensor Defendant and the Operator Defendant was the same for all but one of the factors. The Court found that the Operator Defendant could be considered to have a connection to Ontario because it marketed the resort in Ontario by way of an agreement with one of the Canadian defendants. The Licensor Defendant was considered to be unconnected to Ontario.

Although as a matter of law no single factor is decisive, the Court found that the Operator Defendant had a real and substantial connection to Ontario such that the Court could appropriately assume jurisdiction. By contrast, the Licensor Defendant was found not to have such a connection, and the action against the Licensor Defendant was stayed. This case confirms that a trademark licensor, whose only connection to a jurisdiction is the use of a licensed mark in that territory, may not be considered to have a real and substantial connection to the jurisdiction for the purposes of litigation.
 

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