On May 25, the Supreme Court of Canada released its decision in
Masterpiece Inc. v. Alavida Lifestyles Inc., confirming
that Canada's trademark regime is based on firstto- use rather
than first-to-file principles.
In 2005, Alavida Lifestyles Inc., an operator of retirement
residences, applied to register the trademark MASTERPIECE LIVING in
Canada on the basis of proposed use. The mark was subsequently
registered in 2007. After the registration, Masterpiece Inc., also
an operator of retirement residences, sought to expunge the
registration on the basis that it was confusing with its
unregistered trademark MASTERPIECE (and other MASTERPIECE-related
marks) which had been in use since 2001. Masterpiece operated in
Alberta, while Alavida operated in Ontario.
In the Federal Court, both the Trial Court and the Court of
Appeal rejected Masterpiece's claim on the basis that there was
no likelihood of confusion because Alavida's and
Masterpiece's respective trademarks were not being used in the
same geographic locales. The courts also found that
Masterpiece's trademarks, taken as a whole, were sufficiently
different from MASTERPIECE LIVING to prevent confusion and that
Alavida's actual use of its mark would not cause confusion with
Masterpiece's mark. Furthermore, because the services offered
in association with the marks were expensive, consumers would pay
careful attention and distinguish between the trademarks when
making purchasing decisions.
By granting Alavida the exclusive right to use its mark on a
national basis, despite the prior common law rights held by
Masterpiece, the courts arguably rendered Canada's trademark
regime a first-to-file, not a first-to-use, regime.
The Supreme Court Decision
In deciding that Alavida's mark should be expunged, the
Supreme Court held that because an owner of a trademark
registration has the exclusive right to use that trademark anywhere
in Canada, the location where the marks are actually used is
irrelevant. This was based on the wording of the Trade-marks
Act itself, which indicates that the test for confusion is
based on hypothetical, not actual, use in the same
geographic area. Further, the Court found that the assessment of
confusion should not be based on a single composite analysis
comparing all of Masterpiece's unregistered trademarks and
trade names, generally, to MASTERPIECE LIVING (Alavida's
registered mark). Rather, each of Masterpiece's marks should
have been separately compared. The Court also confirmed that an
assessment of confusion must be based on the entire scope of
exclusive rights and potential uses granted by the trademark
registration, not the actual use of the trademark.
The Court dealt with the issue of the relative cost of the goods
or services offered under the competing marks as a consideration in
determining confusion. While the Court acknowledged that costly
services might lead to greater care in making a selection, and
therefore less confusion, it limited the power of this often-used
argument stating: "Confusion must instead be assessed from the
perspective of the first impression of the consumer approaching a
costly purchase when he or she encounters the trade-mark. The
possibility that careful research could later remedy confusion does
not mean that no confusion ever existed or that it would not
continue to exist in the minds of consumers who did not carry out
that research." The proper test is how the casual consumer
with imperfect recollection would react upon encountering a mark in
Finally, the Court made some comments about the use of survey
evidence to demonstrate confusion, tacitly criticizing the extent
to which this evidence has become nearly mandatory in trademark
litigation. The Court held that in many cases, a survey is not
necessary to assist the trier of fact in determining whether
confusion exists, and should not be admitted.
What This Means for Trademark Owners
This decision confirms the benefits of conducting careful
searches for unregistered trademarks before filing a trademark
application or commencing use of a mark, since it is clear that
prior use of an unregistered mark will be grounds for opposing or
expunging the registration of a confusing mark. For owners of
unregistered marks, this decision provides some comfort that Canada
is still a first-to-use jurisdiction.
The Court's remarks on survey evidence have a beneficial
effect on trademark owners. Although enforcement of marks can still
be an expensive proposition, the Supreme Court is clearly trying to
cut down on the burden of enforcement costs by eliminating one of
the significant expenses associated with taking a trademark case to
The Federal Court dismissed a motion by Apotex seeking particulars from Allergan's pleading relating to the prior art, inventive concept, promised utility and sound prediction of utility of the patents at issue.
Last year we saw the Canadian Courts release trademark decisions that granted a rare interlocutory injunction, issued jailed sentences for failure to comply with injunctive relief, grappled with trademark and internet issues...
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