Several recent decisions of the Canadian courts and the
Trade-marks Opposition Board (the “Board”) analyze the
impact of e-commerce on claims of trademark “use” in
Canada. “Use” is key to both registering and
maintaining a trademark registration in Canada. These
decisions are of particular importance to foreign trademark owners
seeking trademark protection in the absence of a physical presence
in Canada (e.g. a retail establishment or hotel). In both
opposition and non-use proceedings, the Board seems to be closely
scrutinizing the nature of services offered in Canada when the
primary contact with consumers is via the Internet.
Under section 4 of the Trade-marks Act (the
“Act”), a trademark is used in association with
services if it is “used or displayed in the performance or
advertising of those services.” This has been interpreted to
require performance of the services in
Canada. For wares, the trademark must be displayed
on the wares themselves, or possibly on point-of-purchase materials
and the wares must be sold in Canada in the ordinary course of
trade.
Retail Store Services
Historically, “use” of a mark in association with
retail store services required a physical presence in Canada -
advertising was not enough. The cases held that a
foreign trademark owner without a brick-and-mortar store in Canada
could only claim use if it could perform normal retail services
such as taking orders from and shipping goods to Canadians. Listing
prices in Canadian dollars on a website, having a Canadian phone
number, advertising regularly in Canadian magazines or media with a
large Canadian circulation, displaying the Registrant’s name
on invoices confirming delivery in Canada, or customizing the
website or catalog for Canadians would also help to show
“use”.
In 2011, in an appeal from the decision of the Registrar in a
non-use proceeding, the Federal Court held in TSA Stores Inc.
v. Registrar of Trade-marks that “services” should
be given a liberal interpretation; as long as some members of the
public, consumers, or purchasers receive a benefit from the
activity, it is a service. In this case, the registrant did
not own any stores in Canada (stores had been operated, but closed)
but filed evidence that very significant numbers of Canadians
accessed its website. The Court held that a trademark
registration for retail store services could be maintained in the
absence of a brick-and-mortar store in Canada, even without
evidence of Canadian purchases from the website. The TSA website
provided information such as the “Help Me Find Gear,”
“Shoe Finder” and “Store Locator” tools;
the Court found that these ancillary retail store services offered
an experience akin to visiting a brick-and-mortar store and
benefitting from a discussion with a knowledgeable salesperson. The
Court found that this was a benefit to the public, so it was a
service. The registration was maintained.
In contrast, in Lapointe Rosenstein LLP v. West Seal Inc.,
the Registrar interpreted the TSA decision narrowly,
expunging West Seal’s trademark ARDEN B, registered in
association with retail apparel store services and a variety of
clothing-related wares. West Seal did not have facilities to ship
merchandise internationally. Canadian customers ordering from
the website used a third-party shipping company to deliver the
purchased items to Canada. The Registrar found this insufficient;
absent evidence that the registrant itself shipped orders made
through its website to Canada, the services were not performed
in Canada.
The Registrar also held in Poltev v. MMI-GOC LLC that the
mere registration and operation of a “.ca” domain name
does not, in itself, constitute use of a trademark for services in
Canada.
Hotel and Travel-related Services
A recent non-use proceedings decision, Bellagio Limousines
v. Mirage Resorts Inc., adds a new wrinkle to issues of
trademark use for hotel and travel-related services in the absence
of a physical location in Canada.
At issue was whether two trademark registrations owned by Mirage
Resorts Incorporated (“Mirage Resorts”) relating to the
Bellagio Hotel in Las Vegas were used in Canada. One
registration covered: (1) promotional and guest relations services,
namely hotel and casino reservation and booking services; (2)
casinos and live entertainment services; and (3) hotels, beauty
salons, and health spas. The other covered ladies’
clothing, sportswear and clothing accessories.
Mirage Resorts’ evidence showed that it operates the Bellagio
Hotel in Las Vegas, and spent significant sums to advertise and
promote the BELLAGIO mark in Canada, particularly through its
website. Numerous Canadians visit the hotel each year and book
vacations through the website. Further evidence from a
Toronto-based travel agent attested that he visited the Bellagio
hotel and booked vacations there for Canadian clients.
Even though the BELLAGIO mark was well-known in Canada, Mirage
Resorts’ advertising and promotion was not enough to amount
to use of “hotel services”, since it did not actually
operate a hotel in Canada. According to the Registrar, “while
technology has progressed to the point where one can enjoy the
retail experience without ever having to leave one’s home,
there is no evidence that hotel services have made such progress; a
brick-and-mortar presence in Canada is required for hotel services.
A hotel cannot operate via the internet or a 1-800 telephone
number.” The registration was maintained only for
“promotional and guest relation services, namely hotel and
casino reservation and booking services.” This decision
indicates that the Board will take a narrow view of hotel services:
a trademark owner must be able to show that it is ready,
willing, and able to perform the services in Canada. Even
very well-known marks cannot be maintained on the basis of Canadian
promotional activities alone, notwithstanding that many Canadians
visited the hotel.
These decisions, and others, demonstrate the importance of the
specific wording used to describe the services used. For
example, in Venice Simplon-Orient-Express, Inc. v.
Société Nationale des Chemins de fer Français
SNCF, the Registrar maintained the registration ORIENT EXPRESS
covering “travel services, namely railway and
passenger service” despite the fact that the
Registrant did not have a place of business in Canada, and operated
the rail service only in Europe. The Registrant delivered
seminars to Canadian travel agents, who then made reservations for
their Canadian customers on the Registrant’s European
trains. The Federal Court maintained the registration on
appeal, holding that “travel services, namely railway
passenger service,” encompass incidental or
ancillary services such as train ticketing and train reservation
services, even when provided through an intermediary Canadian
travel agency.
In 2006, the Registrar maintained another registration for
“hotel services” in Borden Ladner
Gervais LLP v. WestCoast Hotels, Inc. The Registrant
showed that Canadians made reservations on its website for
WESTCOAST hotels in the United States, and participated in the
Registrant’s loyalty program in Canada. Importantly, the
Registrant had recently licensed the mark as a secondary or house
mark for hotels in Canada. The Registrar found that
“hotel services” should not be narrowly interpreted;
the performance of reservation services and of loyalty program
services both constituted the performance of hotel
services.
Last year, the Federal Court reinforced this approach in
Homeaway.com, Inc. v. Hrdlicka. Homeaway.com sought
to expunge the mark VRBO for “vacation real estate listing
services” on the basis of its prior use of the identical mark
for identical services, and on the basis of the trademark
owner’s fraudulent statements to the Trade-marks
Office. The Court expunged the mark, finding that
Homeaway.com possessed valid prior rights through its U.S.-based
website. Facts also showed that Canadians listed rental properties
and made bookings using the website. On this basis, Justice Hughes
stated that a trademark which appears on a computer screen website
in Canada, regardless of where the information may have originated
from or be stored, constitutes for purposes of the Trade-marks
Act use and advertising in Canada.
Recommendations for Trademark Owners
In the absence of sales to Canadians and a Canadian retail location, a foreign registrant bears a heavy burden to show that its website is directed to Canadians, and mimics a traditional retail store experience with significant interactivity akin to visiting a brick-and-mortar store. In order for the owners of trademarks covering retail services to show that they are ready, willing, and able to perform the registered services in Canada, they should consider whether:
- the customer purchased and took delivery of goods in Canada (items purchased online, by catalogue, or telephone must be delivered to Canadians, in Canada, by the registrant or its agent rather than by a third party);
- there is a Canadian website or catalogue;
- the listing prices are in Canadian dollars;
- a Canadian phone number is provided;
- the trademark is advertised in Canadian publications or in publications with a large Canadian circulation; and
- the registrant’s name is displayed on invoices confirming delivery in Canada.
In terms of obtaining or maintaining trademark registrations for “hotel services” where the registrant does not operate a hotel location in Canada, trademark owners should consider:
- always specifically including “reservation services” in the application;
- licensing their mark to local businesses; and
- making loyalty programs available to Canadian website users, and keeping track of the number of Canadians enrolled in such loyalty programs.
It is important to recognize that many of these decisions arise
in summary non-use proceedings, where the Registrar exercises
limited discretion, and can only determine if there has or
has not been “use” as described in the
Trade-marks Act. These same issues may arise in opposition
proceedings, and can impact the enforceability of a trademark
registration. In contrast to the Board’s position, the
Federal Court and Federal Court of Appeal have recognized that the
existence of goodwill does not depend on use in Canada; a foreign
trademark owner may have valid goodwill subsisting in its mark,
despite the fact that it does not conduct business in
Canada.
Further commentary from the Courts will be needed to clarify the
issue of if and when online trademark use, in the absence of a
physical presence in Canada, constitutes “use” in
Canada.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
