Canada: Lessons Drawn From The Supreme Court ’S Decision In Masterpiece : Register Your Trade-Marks !

Last Updated: December 15 2011
Article by Marie-Hélène Giroux

The recent decision of the Supreme Court of Canada in Masterpiece Inc. v. Alavida Lifestyles Inc. is interesting in several respects. Not only does the Supreme Court of Canada rarely deal with disputes involving trade-marks, but this decision also clarifies numerous principles of trade-mark law that remained uncertain until very recently. In addition, the decision provides several interesting lessons for trade-mark owners relating to, among other things, filings of applications for registration of their trade-marks.

The dispute before the Supreme Court of Canada deals in a general way with the notion of confusion between trademarks. Indeed, the issues on appeal in this case consisted in determining whether the trade-mark MASTERPIECE LIVING, proposed and subsequently registered by Alavida Lifestyles Inc. ("Alavida"), a company entering the retirement residence industry in Ontario, created confusion with the unregistered trademarks, including MASTERPIECE THE ART OF LIVING, or the trade-name that another corporation, Masterpiece Inc. ("Masterpiece"), was already using in the same industry in Alberta.

In its decision, the Supreme Court of Canada was mainly interested in four issues.

First, the Court asked itself whether the location where a mark is used is relevant when considering the likelihood of confusion between an applied for or registered trademark and a prior unregistered trade-mark or trade name. The Court observed that the test set out in the Trade-marks Act (the "Act") for the analysis of confusion provides that one must assess the impression created by the two trade-marks as if they were used in the same area, irrespective of whether this is actually the case. Furthermore, the Court observed that Canada's trade-mark regime is national in scope: the Act entitles the owner of a registered trade-mark the exclusive right to use it throughout Canada. Thus, in order for the owner of a registered trade-mark to have the exclusive right to use it throughout Canada, there must not be a likelihood of confusion with another trade-mark anywhere in the country. Therefore, the Court came to the conclusion that the locations where the trade-marks were actually used were not relevant for the purposes of the analysis relating to confusion.

Secondly, concerning the factors to be considered in assessing the resemblance between two trade-marks, the Court observed that the registration of a trademark does not in itself confer priority of title to the trade-mark and that a person seeking to register a trade-mark must first establish that she has a right to it because she uses it. Moreover, according to the judges, in matters of confusion, the test remains, as a matter of first impression, what is left in the mind of a casual consumer somewhat in a hurry when he sees the trade-mark, while having only an imperfect recollection of the prior trade-marks he has seen and does not pause to give the matter any detailed consideration or scrunity or examine closely the similarities and differences between the marks. The Court also observed that it is necessary to study each trade-mark separately (rather than undertaking a single composite analysis of the trade-marks): even one similar trade-mark or trade name will invalidate Alavida's registration. Indeed, the Supreme Court was of the opinion that the trial judge erred in undertaking a single composite analysis in which he examined generally the resemblance between Alavida's trade-mark and all of Masterpiece Inc.'s trade-marks and trade name. Thus, the judges concluded on this point that taking into account the strong similarities, it is very difficult not to conclude that a strong resemblance exists between the two trademarks of Masterpiece and Alavida.

Thirdly, the Court considered what influence the nature and the cost of the wares or services involved had in the confusion analysis. The Supreme Court concluded that the trial judge erred in considering that consumers of expensive goods and services would generally take considerable time to inform themselves about the source of those goods and services to suggest a reduced likelihood of confusion.

Lastly, with regards to the usefulness of expert evidence in the confusion analysis, the Court's judges stated that an expert should only be permitted to testify if his testimony contains information that, in all likelihood, is outside the experience and knowledge of the judge, which was not the case in this matter. The Court added that judges should be careful to question the necessity and relevance of such evidence, perhaps as part of a case management process, particularly in light of the substantial cost of evidence that may be of little utility.

In conclusion, the taking into account of all the circumstances of this matter, notably the factors stated in the Act relating to confusion and particularly the strong resemblance between the MASTERPIECE LIVING trade-mark and the MASTERPIECE THE ART OF LIVING trade-mark of Masterpiece, led to the conclusion that Masterpiece had proven that the use of Alavida's trade-mark in the same area where its trade-marks are used would likely lead to the inference that the services associated with Masterpiece's trade-marks were being performed by Alavida.

What lessons learned from this judgment should a trader-mark owner remember? First, it is essential to carry out a trademark availability search before filing an application for registration or beginning to use the trade-mark in order to avoid the risks of confusion. Moreover, an owner of a trade-mark should proceed as quickly as possible with the filing of an application for registration of his trade-mark in order to benefit from the advantages conferred by registration and thus avoid finding himself in the same situation as Masterpiece Inc. Once the trade-mark is registered, it is still important to monitor for inappropriate use that may be made of the trade-mark by third parties. Various preventive actions can help you avoid a lot of problems.

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.

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