Quebec Court Shines Light on LED Trade-mark Ownership

In 6766285 Canada Inc c. 2900319 Canada Inc., 2015 QCCS 5143, Justice Courchesne of the Quebec Superior Court held that Divvali was the rightful owner of the DIVVALI trade-mark and that the Defendant, Encore, had not acted in good faith during prior settlement negotiations.

Messer started an LED business in 2003 under the name Divvali Lighting Inc. That business was eventually dissolved, and Messer was hired by Percher, his uncle, to develop a similar LED division for Encore. Percher incorporated the LED division and registered the trade name DIVVALI in its favour. Percher then transferred a controlling interest in Divvali to Messer.

The relationship between uncle and nephew grew strained in 2010. Percher subsequently unilaterally applied to register the DIVVALI trade-mark in Canada and the US in favour of Encore. Upon discovering this, Messer brought an action seeking a declaration that he and Divvali were the sole owners of the DIVVALI mark. The parties settled the dispute, with the trade-mark and registrations at issue being assigned to Divvali. In 2012, Messer learned that Percher had registered the DIVVALI mark in Europe and Australia during negotiation of the Settlement Agreement.

Percher argued that Encore owned the DIVVALI mark because of Encore’s prior use of the mark and because of its financial investments in Divvali. Justice Courchesne held that prior use of the mark was by Divvali, not Encore, and that Percher overstated Encore’s financial contribution to the Plaintiffs. She therefore concluded that Divvali was the rightful owner of the DIVVALI mark.

Justice Courchesne also concluded that Percher did not act in good faith during negotiation of the Settlement Agreement. This was evinced by the fact that Percher did not disclose the European and Australian registrations to his own attorney. Justice Courchesne found that Percher knew that the parties were negotiating to resolve all of their differences regarding the DIVVALI mark and trade name and that the attorneys for both parties believed that the Settlement Agreement covered the full ownership of the DIVVALI mark, not just the Canadian and US registrations.

Justice Courchesne ordered Encore to transfer “any registration of the Divvali trademark anywhere in the world” to the Plaintiffs.

A copy of the decision can be found here.