Last week, in Parsons Inc. v Khan, 2021 FC 57, the Federal Court found the owner of a phishing website liable for passing itself off as the Applicants’, Parsons Corporation and Parsons Inc. (“Parsons”).
Parsons, a multinational engineering and construction firm with a Canadian subsidiary, has applied-for and used, but not yet registered, the PARSONS trademark in Canada.
The Respondent, Nayyer Khan (the “Respondent”), registered the domain , purporting to be Parsons’ website. The Respondent has a known history with fraudulent websites, and has previously been found by the World Intellectual Property Organization to have created a phishing website, purporting to be the multinational agency Hays PLC.
After numerous attempts to contact the Respondent, Parsons brought an Application based on the common law tort of passing off at the Federal Court. The Respondent did not respond to the Application.
The Court concluded an injunction should issue, and awarded both damages and costs. The Applicant’s success in obtaining injunctive relief to remove this fraudulent website by the summary Notice of Application procedure offers hope to businesses contending with the increasingly problematic issue of fraudulent and phishing websites.
The Applicant’s Choice to Proceed by Application
The Court first addressed Parsons’ choice to bring an Application. The Court noted that the Trademarks Act (the “Act”) allows for proceedings to be brought by way of Action or by Application. In certain instances, the Court may decline to hear a summary procedure if there are insufficient procedural safeguards to ensure fairness to the respondent. The Court found the Application was an appropriate procedure in this case, as the Applicants had presented clear evidence, and the Respondent had ample opportunity to fairly defend the Application.
In reviewing the common law tort of passing off, the Court analyzed each of the three necessary components.
1. The Existence of Goodwill
The Court found that Parsons had acquired significant goodwill in the PARSONS trademark in Canada, despite the lack of registration. Notably, Parsons has more than a thousand employees, working in 14 locations, across five provinces. Parsons has spent over $100,000.00 in promotions and advertisements in the last five years, and has an extensive online presence. The Court found the first branch of the test was satisfied.
2. Deception of the Public Due to a Misrepresentation
The Respondent was found to have made at least three misrepresentations to the public, by: 1) feigning to be Parsons in the context of an interview; 2) taking an image from Parsons’ Twitter account and posting it as a representative image of his location; and 3) using the trademark PARSONS CONSTRUCTION. The Court found all three misrepresentations were wilful, and the first two were deceitful.
The Court reviewed the test for trademark confusion, namely, the “casual consumer somewhat in a hurry” and considered the factors set out in section 6(5) of the Act. The Court found the Respondent had adopted a mark incorporating wholly the PARSONS trademark, offering overlapping goods and services to the PARSONS mark, and was operating in the same channels of trade. The Court concluded the Respondent had adopted a mark that was confusing, or likely to be confused, with the PARSONS trademark.
3. Actual or Potential Damage
The Court confirmed that damage cannot be presumed; proof of actual or potential damage is necessary. The Court noted that while it was difficult to ascertain the extent of the damage caused by the use of the confusing PARSONS CONSTRUCTION trademark, due to the Respondent’s refusal to participate in the proceedings, damage had been established.
The Court held that Parsons had suffered, at minimum, damage through the loss of customers and potential employees, damage to its reputation, noting that the Respondent’s website is “rife with typographical errors and ludicrous pronouncements”, and that the Respondent jeopardized the distinctiveness and goodwill attached to the PARSONS trademark.
Having found the Respondent was liable for passing off Parsons’ trademark and business, the Court followed the guidance of J. Manson’s decision in Trans-High Corp v Hightimes Smokeshop and Gifts Inc, 2013 FC 1190, to determine the quantum of damage and costs in a proceeding where the respondent has been uncooperative and absent. The Court awarded the Applicant damages in the amount of $25,000, and $30,000 in costs.