The year 2014 will be remembered as the year Canada rewrote its trademark laws. Much has been written on this subject and much more will be written over the next few years. However, 2014 was also an exceptionally busy year for trademark cases in Canada. While no single case stood out above the rest, there were a number of interesting cases of which both legal professionals and brand owners will want to take note.

1. When is a trademark clearly descriptive of geographic origin?

Lum v. Dr. Coby Cragg Inc. and MC Imports Ltd. v. Afod Ltd.

In Lum, the Federal Court considered whether the registered mark OCEAN PARK for use with “dental clinics” was clearly descriptive of place of origin as the dental clinic in question was located in an area called Ocean Park. The Court applied a two-part test, namely that:

  • The mark must point to a place.
  • The place must be indigenous to the services in question.

The plaintiff failed on the second part of the test as Ocean Park is not indigenous to dental services. There was no evidence that a reasonable person hearing “Ocean Park” would automatically think of going to the dentist and, as a result, the registration was maintained.

In MC Imports, the Federal Court considered whether the registered mark LINGAYEN, covering a variety of Filipino foods — including “bagoong,” a fish sauce — was clearly descriptive of the place of origin of these products. The evidence showed that Lingayen is a municipality in the Philippines and is a known source of bagoong. Furthermore, the registrant’s goods originated from Lingayen. As such, the Court deemed the mark to be clearly descriptive of the place of origin and the registration was ordered expunged.

The Federal Court also considered the issue from the perspective of the “ordinary consumer” and concluded that he/she would not be without knowledge, and would have some intelligence and concern about the item being purchased. The ordinary consumer in this case would essentially be Canadians of Filipino or Southeast Asian origins, a group among which LINGAYEN would be viewed as clearly descriptive of origin.  

Both the Lum and MC Imports decisions have been appealed, providing the Federal Court of Appeal an opportunity to clarify the test to be applied in determining if a mark is objectionable on the basis that it is clearly descriptive of place of origin.

2. Distinctiveness of geographical designation not linked to absence of deception

London Drugs Limited v. International Clothiers Inc. 

London Drugs, a well known Canadian drugstore chain, owns various trademark registrations which incorporate the term LONDON. It appealed a decision of the Opposition Board that allowed applications for the trademark SMITH & BARNES LONDON, covering a variety of retail store services and related wares.

In assessing confusion, the Federal Court rejected the argument that a trademark incorporating a geographic term may be distinctive where it is used on wares or services that have no pre-existing connection to the designation. It noted that the distinctiveness of a mark has to do with its originality, uniqueness and inventiveness, not with the absence of deception. Geographic designations, such as LONDON, are not inherently distinctive, and should not be accorded a high degree of protection unless they have acquired distinctiveness over time. The Court upheld the Board’s decision and rejected the appeal.

3. Assessing confusion between inherently weak letter marks

Gemological Institute of America v. Gemology Headquarters International   

An application for GHI was opposed by the Gemological Institute of America on the basis of confusion with its registered trademark, GIA. Both marks covered wares/services in the field of gemology. The Opposition Board noted the inherent weakness of marks consisting of letter acronyms and rejected the opposition. On appeal to the Federal Court, fresh evidence was filed to show that while not inherently distinctive, the opponent’s GIA mark had been used over a significant period of time and was well known in Canada. The Court noted that if this new evidence had been before the Board, it would have approached the confusion analysis differently, and would have considered that the opponent’s mark was well known. The appeal was allowed, and the application to register GHI was refused. The Court’s decision has been appealed.

4. Consideration of Nature of Wares and Channels of Trade

Hayabusa Fightwear Inc. v. Suzuki Motor Corporation and Bridgestone Corporation v. Campagnolo S.R.L.

In Hayabusa Fightwear, the applicant, a company specializing in mixed martial arts, appealed the Board’s decision to refuse its application to register HAYABUSA for use with clothing. Suzuki opposed the application on its registration for the identical mark HAYABUSA for motorcycles, and on its prior use of HAYABUSA with motorcycles and caps.

The Court found that the Board failed to consider the different channels of trade for the parties’ products. As Suzuki did not hold a registration covering “caps,” it was imperative to consider its actual use with these goods, which involved sales strictly through authorized Suzuki dealers (i.e., a single channel of trade and to targeted consumers). The fact that it would be virtually impossible to find the parties’ wares in the same channels of trade should have been determinative of the matter in favour of Hayabusa Fightwear. The Court set aside the decision of the Board and allowed the application.

Similarly, the nature of the wares and channels of trade were key considerations in Bridgestone. Campagnolo, a manufacturer of track and competitive road racing bicycle parts and accessories, applied to register the trademark POTENZA with bicycle parts and accessories, but not including tires, brakes, wheels, rims and spokes. Bridgestone, primarily known for its automotive products, opposed based on its registration of the identical mark POTENZA in association with tires, tubes and wheels. The Board held that there was no reasonable likelihood of confusion and, on appeal, the Court agreed.

Bridgestone argued that it was erroneous to only consider current channels of trade — just because Campagnolo currently sells high-end bicycle components in specialty stores does not mean it will not market a cheaper line in big-box stores in the future. The Court disagreed, noting that the parties’ respective statements of wares must be read with a view to determining the probable channels of trade as opposed to the possible channels of trade.

5. Always confirm the other side is still active

Bacardi & Co. Ltd. v. The Devil’s Martini Inc.

An application for the trademark DEVIL’S MARTINI was unsuccessfully opposed by Bacardi, who appealed to the Federal Court. During the appeal, it became apparent that the applicant had been dissolved. After confirming that the Office of the Public Guardian and Trustee in Ontario did not intend to continue with the application and that the Director appointed under the Ontario Business Corporations Act did not intend to oppose the appeal, the Court held that the mark was not registrable under section 30 of the Act and ordered that the application be refused. 

6. Issue raised for the first time on appeal refused

Cohen v. Susan Fiedler Incorporated  

Cohen’s application for the “F CANCER & Design” mark was successfully opposed by Fiedler on the basis of Fiedler’s prior use of a series of unregistered “F CANCER” marks. On appeal, Cohen raised an entirely new argument — that the word “f***” was obscene and therefore prohibited by section 9(1)(j) of the Act. The Court noted the argument was “somewhat counter-intuitive” given that it would be fatal to Cohen’s own application, but Cohen conceded that her goal was not the registration of her own mark, but for the collateral purpose of obtaining a ruling from the Court that Fiedler had no enforceable common law rights to its “F CANCER” marks.

The Court held the question should have been decided by the Opposition Board, the expert tribunal with the authority to decide such questions, and that there was no valid reason why the argument could not have been raised before the Board. The appeal was refused, and the Court went on to assess elevated costs given the appeal had been brought for collateral purposes.

7. A strict interpretation of “use in Canada” not applicable in s.45 proceedings

Ridout v. HJ Heinz Company Australia Ltd.  

In a non-use cancellation proceeding, the Registrar of Trademarks maintained the registered mark OX & PALM for use with meat and processed meat. The evidence before the Registrar showed that the Registrant received a purchase order for the wares, and the goods were delivered to a shipper in Australia prior to the expiration of the material period, but that they were subsequently delivered to the Canadian customer three days after the expiration of the material period. The Registrar maintained the registration, noting that the mark was not “deadwood” and that this case did not warrant a strict interpretation of “use.” The Federal Court upheld the decision, concluding that there was a transfer of property in the goods in Canada when they were delivered to the shipping entity in Australia so long as the delivery to Canada was ultimately completed.

8. Thymes decision distinguished

Coors Brewing Company v. Anheuser-Busch, LLC

The Reitmans (Canada) Ltd. v. Thymes Ltd. decision confirmed that an application claiming use and registration in another jurisdiction must have all of the requisite elements present (use and the foreign registration, or at least a pending application) as of the Canadian filing date. If not, the application could be successfully opposed. The Coors case establishes that an allegation of an improper foreign registration and use claim in a registered mark does not constitute a ground for expungement. A lack of foreign use at the Canadian filing date is not fatal to registered trademarks that are issued based on a claim of foreign use and registration, provided that the claim was true at the time it was made.

In August 2010, Anheuser filed a U.S. application to register GRAB SOME BUDS based on intention to use in the U.S. A corresponding Canadian application was filed in mid-September 2010 based on proposed use in Canada. Use commenced in the U.S. in late September 2010, and the U.S. case issued to registration in March 2011. In February 2011, Anheuser amended its Canadian application to rely on foreign (U.S.) use and registration. The Canadian application proceeded to registration on this basis.  

Coors applied to expunge Anheuser’s Canadian registration, arguing that it was invalid since use of the mark did not commence in the U.S. until after the Canadian filing date. The Court disagreed and upheld the registration. The sole basis for invalidating the registration raised by Coors was the alleged improper foreign registration and use claim. However, the grounds upon which a registration may be expunged are set forth in section 18 of the Act, and the Court confirmed that non-compliance with procedural filing requirements under section 30 of the Act does not constitute grounds for expungement. Furthermore, while a misstatement in an application may present a ground for expungement, the statement made by Anheuser in its application was true at the time it was made and, as such, it did not constitute a misstatement.

9. Section 9 objection at examination overturned by Federal Court

Jack Black L.L.C. v. Canada (Attorney General)

The applicant applied to register JACK BLACK for skin-care products. The Examiner objected to the registrability of the mark on the basis that Jack Black is a “famous living individual.” On appeal, the Federal Court concluded that the printouts from the internet relied on by the Examiner in reaching his decision were insufficient to establish that there was an individual named Jack Black with a significant public reputation across Canada. The applicant also filed new evidence showing that the skin-care products offered under its mark were not new, and in fact benefitted from a fairly large circulation, without objection from Jack Black.

10. The Federal Court considered official marks

Terrace (City) v. Urban Distilleries Inc. and TCC Holdings Inc. v. Families as Support Teams Society

In Terrace, which concerned the official mark SPIRIT BEAR, the Court held that the failure to show prior adoption and use resulted in a declaration that the official mark was unenforceable. The Court noted that adoption “is a low bar; all a party must do is state it has adopted the mark.” Use requires that the mark was made available for public display prior to publication. The Court noted that “such use cannot be abstract. It must be associated with a particular ware or service, and a connection must be made with the wares or service and the mark.”

In surveying the relevant case law, the Court noted that public display can include the display of a mark on a website in association with a particular service; use can be found when an announcement for the services and a logo, containing the mark and a graphical depiction of the mark, have been published in a public newsletter. A mark is not used where it is not distinguished from surrounding text, nor when it is used on internal communications only. 

The evidence fell short of establishing use, with the result that the SPIRIT BEAR official mark was deemed unenforceable. The Court’s decision has been appealed.

In TCC Holdings, the Court considered whether a registered charity qualified as a public authority for the purposes of section 9 of the Act.

The Respondent, the Families as Support Teams Society, was a registered charity when it obtained the protection of section 9, but its charity status was revoked shortly thereafter. It did not participate in the proceedings.

The Court was satisfied that the Respondent was not a public authority, noting that it did not meet the test of significant governmental control. As such, the Court did not have to consider whether its activities satisfied the public benefit requirement. The Court further noted that even if it had been a public authority, it ceased to be one when its charitable status was revoked such that it was not entitled to benefit from the official mark.

11. Punitive and aggravated damages distinguished

Bauer Hockey Corp. v. Sport Maska Inc.

On a motion dealing with the sufficiency of pleadings, the Federal Court of Appeal commented on the distinction between punitive and aggravated damages. The Court noted that:

  • Punitive damages are intended to punish the defendant in situations where the defendant’s misconduct is so malicious, oppressive and high-handed that it offends the court’s sense of decency. They are not limited to situations of litigation misconduct.
  • Aggravated damages are intended to compensate the plaintiff and are usually awarded in relation to intangible injuries (humiliation or mental distress), and it is questionable whether such damages could be claimed by a corporation.

The Court struck Bauer’s claim to aggravated damages, but allowed the claim for punitive damages to remain in the Statement of Claim. While allegations of wilful and knowing infringement alone do not support a claim to punitive damages, the Court held that it was not plain and obvious that the Statement of Claim disclosed no reasonable cause of action with respect to punitive damages, as there were other allegations to be considered.

12. Criminal Sanctions stemming from the sale of counterfeit goods

R v. Strowbridge (NLCA)

The accused was seen selling counterfeit brand-name products from the back of a van parked next to the highway, and $500 worth of product was seized. He pled guilty to fraud, and copyright and trademark infringement, and was sentenced to 15 months in prison — six of which were for copyright infringement under the Copyright Act and trademark infringement under the Criminal Code.

On appeal, the Newfoundland Court of Appeal canvassed sentencing decisions relating to the sale of counterfeit goods, primarily under the Copyright Act, most of which resulted in conditional sentences. The Court distinguished between operations where customers buy goods from an ostensibly legitimate storefront operation versus the purchase of goods from the back of a van parked on the side of a highway, noting that while purchasers of counterfeit goods can be victims, there is no indication they were in this case. The Court deemed Strowbridge’s operation to be marginal and unsophisticated. 

The Court agreed a six-month sentence was disproportionately long and reduced it to two. This decision is of particular interest given the recent amendments to the Trademarks Act, which provide for significant criminal sanctions in relation to counterfeiting activities.

Conclusion

Space permits nothing more than a very quick overview of some of the key cases decided in the courts in 2014. However, if you have any questions concerning the cases discussed or about Canadian trademark law in general, please do not hesitate to contact the authors.