2012 SCC 8 (February 28, 2012)
Overview
The Supreme Court addressed the test to be applied to determine what constitutes a false or misleading representation pursuant to the Quebec Consumer Protection Act. In so doing, the Supreme Court addressed the issues of "general impression" and "average consumer," the interpretation of which it considered informed by relevant trademark jurisprudence, both being forms of consumer protection legislation.
Abstract
The appellant received a letter from the respondent that led him to believe, by its content and most importantly its layout, that he had won a significant cash prize. In reality, the letter was only, according to the respondent, an "invitation to participate" in the sweepstakes, and the appellant instituted an action alleging that the respondent had made false and misleading representations pursuant to the Quebec Consumer Protection Act ("C.P.A."). The Supreme Court established that in order to determine if a representation is false or misleading, the court has to establish the general impression that the representation is likely to convey to a credulous and inexperienced consumer, and that it has to determine whether that general impression is true to reality. If the general impression is not true to reality, the merchant has engaged in a prohibited practice pursuant to the C.P.A. In arriving at such a test, the Supreme Court notably likened the "general impression" required by the C.P.A. to the test of "first impression" similar to that used in assessing confusion in trademark matters. In its analysis, the Supreme Court also likened the standard of the "average consumer" pursuant to the C.P.A. to the "ordinary hurried purchasers" as described in the context of trademark law, ultimately holding that the "average consumer" for the purposes of the C.P.A. should be described as "credulous and inexperienced." Applying these tests to the letter received by the appellant, the Supreme Court ultimately found that the general impression left by the letter was that the person receiving it had won the sweepstakes. Such not being the case, the Supreme Court found the letter to constitute a false and misleading representation pursuant to the C.P.A.
Case summary
Facts. In August 1999, the appellant, Mr. Richard, received a letter in the mail from the respondents. The letter began with the following sentence in large bold print that immediately caught the reader's attention: "Our sweepstakes results are now final: Mr. Jean Marc Richard has won a cash prize of $833,337.00!" Closer inspection of the letter, however, revealed that this passage was part of a two-part sentence that read, in smaller print: "If you have and return the Grand Prize winning entry in time and correctly answer a skill-testing question, we will officially announce that," followed by, in large bold print: "OUR SWEEPSTAKES RESULTS ARE NOW FINAL: MR JEAN MARK RICHARD HAS WON A CASH PRIZE OF $833,337.00!"
The technique used in the writing and layout of the document included several exclamatory sentences in bold uppercase letters, the purpose of which was to catch the attention of the reader and indicate that they had won a prize, combined with conditional clauses in smaller print. The letter assigned the appellant a "Prize Claim Number" that was to be used for identification purposes. A reply coupon titled "Official Entry Certificate" and a return envelope containing the rules of the sweepstakes in small print were also enclosed with the letter.
After carefully reading the document twice, the appellant concluded that he had won the sweepstakes in question. To confirm this, the appellant even showed the letter to a vice-present of the company for which he worked whose first language was English, and who agreed with the appellant's understanding of the letter. Convinced that he had won the sweepstakes, the appellant completed and sent in the reply coupon thereby subscribing to Time magazine for a period of two years. The appellant began receiving Time magazine and other promotional items, but did not receive the cash prize, and contacted the respondent accordingly. The appellant was then informed that the letter was merely an invitation to participate in a sweepstakes, and the respondents refused to pay any amount the appellant was claiming.
Analysis. Although various issues addressed by the Supreme Court pertain strictly to application of the C.P.A., one issue is of wider application and of particular interest from a trademark perspective, namely, the issue of the proper approach in Quebec for determining when an advertisement constitutes a false or misleading representation for the purposes of the C.P.A. In this regard, the Supreme Court first canvassed the general objectives of consumer law and the general structure of the C.P.A. and concluded that the enactment of the C.P.A. "reflects the Quebec legislature's desire to extend the protection of the C.P.A. to a broader range of contracts and to explicitly regulate certain business practices that are considered fraudulent as regards their effect on consumers."
The Supreme Court then considered the question of the protection afforded in the C.P.A. against false or misleading representations, stating that this is one of the main objectives of an entire title of the C.P.A., the application of which is guided by section 218 of the C.P.A., which reads "to determine whether or not a representation constitutes a prohibited practice, the general impression it gives, and, as the case may be, the literal meaning of the terms used therein must be taken into account." As such, two factors must be considered: (i) the "general impression" given by a representation and (ii) "the literal meaning" of the words it contains.
Considering first the factor of "literal meaning," the Supreme Court held that the interpretation of this expression was not problematic and simply required that "the meaning given to words used in a representation be the same as their meanings in everyday life" so as to avoid defences based on convoluted, subtle or technical meanings of the words used.
With regard to the factor of the "general impression" given by the representation, the Supreme Court cited recent case law indicating that a representation must be considered in its entirety and "analysed in the abstract, that is, without considering the personal attributes of the consumer who has instituted the proceedings." The Supreme Court then went on to hold that the assessment of the "general impression" conveyed by a representation must not be limited to the specific words used, but extends to the representation's layout. It held that the general impression test adopted by the legislature is "to take account of the techniques and methods that are used in commercial advertising to exert a significant influence on consumer behaviour." On the other hand, the Supreme Court also cautioned that such general impression is not "formed as a result of a rushed or partial reading" nor does its assessment involve the minute dissection of the text.
In this regard, the Supreme Court ultimately held that the proper test is similar to that applicable pursuant to the Trademarks Act, that is to say one of first impression after initial contact with the representation, and considering both its layout and wording.
In order to assess the "general impression" factor described above, the Supreme Court went on to address from whose perspective this general impression must be assessed. The Supreme Court noted that case law pursuant to the C.P.A. has commonly applied the fictitious standard of the "average consumer." In order to determine the level of sophistication of such an imaginary consumer, the Supreme Court referred to other statutes enacted to protect consumers, which apply the "average consumer" test, a good example of which is the Supreme Court's decision in the matter of Mattel U.S.A. Inc. v. 3894207 Canada Inc., [2006] 1 S.C.R. 772 where the Court concluded that the average consumer protected by the Trademarks Act was an "ordinary hurried purchaser" and found that the provisions of the C.P.A. must be applied from a similar perspective.
Applying this standard to the specific context of the C.P.A., the Supreme Court found that the standard of the "average consumer" to be applied in such a context is that of the "credulous and inexperienced" consumer, albeit one capable of understanding the literal meaning of the words used in any given representation.
Applying the test of "general impression" of the "average consumer" as described above, the Supreme Court found that although the respondent's letter did not contain any false representations, the letter was misleading so as to leave the general impression that the appellant had won the sweepstakes and, as such, was in contravention of the C.P.A.
Conclusion
This decision establishes the test to determine whether a representation is false or misleading pursuant to the C.P.A. and also establishes the standard of the "average consumer" that the C.P.A. seeks to protect. However, the impact of the Supreme Court's comments as to the applicability and similarity of the "general impression" and "average consumer" in the C.P.A. and the Trademarks Act on the established application of such terms in trademark law remains to be seen.
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