I spent years at my office watching the gradual construction of the 70-story mixed-use TRUMP TOWER complex in downtown Toronto, Canada. It is now a Toronto landmark and a place for the lawyers and bankers in the financial district to wine and dine clients. Trump, two of his affiliated companies (Affiliates) plus the licensed developer have been sued (Singh v. Trump). The plaintiffs were attempting to hold Donald Trump (the presidential candidate!) liable for alleged misrepresentations by the developer of the attributes of certain hotel condominium units in the Trump Tower complex. The developer was licensed by one of Mr. Trump’s Affiliates to use Mr. Trump’s name and trade-marks for the Trump Tower complex.
Trump is a brand and Mr. Trump is an icon. The plaintiffs alleged that the developer therefor represented that Trump’s name and brand created a “buzz” in ensuring a high average rental rate and a high occupancy rate in the Trump Tower. The Trump brand has value and that is the reason the developer would licence it and then rely on it in its business, with potential buyers.
The Plaintiffs alleged that the hypothetical revenue stream document provided by the developer contained numerous misrepresentations upon which they relied in making their decisions to buy the units. The documents stated that buyers could rent the units and that renters would “flock” to TRUMP hotels. Buyers would have high average rental and high occupancy rates, all based on the TRUMP name and trade-marks.
On the summary judgment applications, several causes of actions were dealt with, including the liability of Mr. Trump regarding the use of his name and trade-marks by the developer. All claims were dismissed by the Ontario Court, including for licensor liability.
The issue was whether Mr. Trump could be held liable for any misrepresentations made by the developer.
The Canadian Trade-marks Act (Act) deems the use of a trade-mark by a licensee to be use by the trade-mark owner, provided that, under the licence, the owner directly or indirectly controls the character and quality of the goods and services for which the mark is used by the licensee.
The Act does not prescribe how controls must be exercised or the effect of exercising those controls. The trade-mark owner usually defines standards for performance of the services and monitors the performance by the licensee as the means of control. The risk is that the owner of the marks may be held liable for the acts or omissions of the licensee, in this case the developer.
In other cases, licensors in Canada have been held liable for service issues, for services provided by their licensee. This was on the basis that the client thought that it was contracting with the trade-mark owner or that the trade-mark owner exerted control over the licensee’s services.
By permitting the Affiliate to licence the TRUMP name and trade-mark to the developer, did Mr. Trump himself misrepresent that the developer had the experience to build the hotel property and sell the units professionally. The buyers argued that it was foreseeable to Mr. Trump that, if he did not vet and supervise the developer properly, harm might be caused to the buyers. Thereby he had an obligation to ensure that the developer had the experience and integrity to develop the hotel properly. The buyers contended that the licensing of the TRUMP name and trade-mark was an implied representation that he had done this.
The Summary Judgment held that the action against Mr. Trump was “devoid of any merit”. Mr. Trump personally did not make any express representation regarding the developer. Any such representation could not be implied merely because Mr. Trump is an “icon,”, his name is a “brand,” or his association with the project caused “buzz”. Mr. Trump’s liability was to be determined by reference to his own contractual or tort duties to the buyers. The Court held he had none. Having one’s name associated with a project does not establish the degree of proximity required to give rise to a duty of care to buyers of units. The Affiliate, not Mr. Trump, granted the licence. Even if the Affiliate licensor could be liable for the actions of its licensee, that is no basis for imposing liability on Mr. Trump personally.
Trump wins! Is this a sign of things to come?