Canada's Federal Court of Appeal recently issued a
decision regarding section 50 of Canada's Trade-Marks
Act, the governing provision regarding licensing of a
trade-mark. In Spirits International BV v. BCF and Registrar of
Trade-marks, 2012 FCA 131, the Court of Appeal set aside the
Federal Court's decision from 2011. The lower court decision
was an appeal from a summary expungement decision of the Registrar
of Trade-marks, wherein the Federal Court upheld the
Registrar's decision to expunge the registered trade-mark since
the mark had not been used during the relevant time period. The
lower court had concluded that the requirements of section 50 had
not been met and, as such, the trade-mark owner was not entitled to
the benefit of the licensee's use of the mark in Canada.
Section 50 provides that use by a trade-mark licensee is deemed
to be use by the owner if the owner has direct or indirect control
over the character or quality of the wares or services (vodka in
this case). In the lower court decision, the judge reviewed
the evidence and found there was only a bare allegation of a
trade-mark licence between the trade-mark owner (Spirits BV) and
the alleged licensee (Spirits Cyprus). The lower court concluded
that "the mere fact that there is some common control between
a registered trade-mark owner and other corporate entities is not
sufficient to establish that the use of the trade-mark was
controlled such that a licensing agreement can be inferred from the
facts. Clear evidence of control has to be adduced." The lower
court also found that the evidence was too vague to establish that
the owner controlled the nature and character of the vodka in order
to satisfy the requirement under section 50 that the owner had
control over the character or quality of the wares or services.
On this latter point, the Court of Appeal disagreed and found
that Spirits BV set the standards of character and quality for
the vodka to be labelled with the subject mark,
notwithstanding that the actual compliance testing was delegated to
other corporate entities. The Court of Appeal concluded by stating
that the trade-mark owner ensured that only vodka that met its
standards was labelled with the subject mark.
With respect to the first aspect of section 50 regarding whether
Spirits Cyprus was licensed with the authority of Spirits BV to use
the trade-mark, as noted above, the Federal Court found the
evidence to be a "bare" allegation of a trade-mark
licence, without any indication of what Spirits Cyprus did under
the alleged licence. However, the Court of Appeal looked more
broadly at the sales invoices to infer that Spirits Cyprus acted
under the licence as the "selling agent for Canadian sales of
vodka bearing the subject mark." The Court of Appeal found
that the trade-mark owner satisfied section 50 and, therefore, that
the trade-mark had been used during the relevant time period.
This statement appears to be an unfortunate co-mingling of the
concepts of an agent and a licensee, but nevertheless shows that
resort can be made to surrounding facts to establish that a
trade-mark licence exists, instead of relying on details of a
licence or even production of the licence itself. Trade-mark owners
should continue to diligently review their licensing arrangements
to ensure they are sufficient to satisfy the requirements of
section 50 to obtain the benefit of that provision in defending or
enforcing their rights 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.
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