The Federal Court of Appeal recently has ruled against Philip
Morris in its latest attempt to sell its MARLBORO cigarettes in
Canada. In 1930, a predecessor of Philip Morris sold the Canadian
rights to the MARLBORO trademark to a predecessor of Imperial
Tobacco. Then, in 1987, after the advent of the Marlboro Man and
the increased reputation of the Marlboro brand around the world,
Philip Morris challenged the validity of Imperial Tobacco's
registration for the MARLBORO trademark on the basis that the
notoriety in Canada of Philip Morris' MARLBORO trademark
negated the distinctiveness of the MARLBORO registration in Canada.
The Federal Court of Appeal disagreed with Philip Morris'
contention and found that the MARLBORO registration of Imperial
Tobacco is valid.
In this latest attempt to introduce the MARLBORO brand into
Canada, Philip Morris launched in Canada a "no-name"
version of its American blend Marlboro cigarettes. The packages
have essentially the same "Rooftop" design as Philip
Morris has been using for its MARLBORO cigarettes around the world
(apart from Canada) for many years, but without any brand name on
them at all. Until the launch of the "no name" version,
the cigarettes sold in Canada in Philip Morris'
"Rooftop" packages have been Virginia blend cigarettes
and the packages were marked "Matador" or
"Maverick." The use of a no-name package is apparently a
first in cigarette marketing in Canada, in which, as a result of
the "dark market" regulations, packages are not allowed
to be on display in retail stores.
After the launch, Philip Morris commenced an action for a
declaration that it does not infringe Imperial Tobacco's rights
under the Canadian MARLBORO registration by selling the no-name
version of its MARLBORO cigarettes, and alleging that
Imperial's package design infringed Philip Morris'
copyright in its package design. A counterclaim by Imperial for an
injunction preventing the sale of the no-name cigarettes brought
the validity of the Philip Morris' package design registrations
and the validity of Imperial's MARLBORO registration once again
The trial judge ruled in favour of Philip Morris in finding that
Philip Morris is entitled to sell its MARLBORO cigarettes in Canada
in the no-name packaging. The Federal Court of Appeal has now
reversed the trial judge and has enjoined Philip Morris from
selling its cigarettes in the no-name packaging in Canada.
The evidence at trial was that consumers ask for
"Marlboro" when ordering the no-name cigarettes, even
though Marlboro is not on the package and that Philip Morris had
told retailers to refer to them as "Rooftop" cigarettes.
In finding infringement despite the omission of the word
"Marlboro" on the package, the Federal Court of Appeal
held that the "mental link" formed in the minds of
consumers between the no-name package and the MARLBORO trademark
could be considered as part of a Section 6 confusion analysis,
either on the basis that the "idea suggested" by the
package design was MARLBORO or that the mental link formed in the
minds of consumers was a "surrounding circumstance" that
could be considered. Both approaches appear to be novel. The Court
apparently preferred these approaches over an alternative approach
that by creating the mental link Philip Morris was, in effect,
using the MARLBORO trademark itself because consumers were
"filling in the blank" as Philip Morris intended them to
do. In the result, the Court held that since consumers are
referring to two different products from two different
manufacturers by the same name, there is a likelihood of confusion
as to source and therefore Philip Morris was enjoined from
continuing to use its no-name packages.
The fact that Philip Morris had registered many of the
individual designs on its no-name packaging was not a bar to
Imperial Tobacco getting relief because the exact overall packaging
design had not been registered. The Court noted that a valid
registration can be a defence to infringement or passing off, but
in this case the "Rooftop" no-name package design as a
whole, including the words "Come to Where the Flavour is"
on the front of the package and the words "World Famous
Imported Blend" on the side of the package, was not
registered. On this basis, it was open to the Federal Court of
Appeal to enjoin the use of the no-name package without first
having to invalidate Philip Morris' individual design element
registrations. Philip Morris' attack on Imperial's
registration for MARLBORO was prohibited by the Federal Court of
Appeal's earlier decision since Philip Morris was not able to
show that the circumstances had changed in any material way since
the last time the Federal Court of Appeal had ruled in
Imperial's favour on the issue. The dismissal of the copyright
infringement claim by Philip Morris was also upheld.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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