Canada: IP Monitor - Imperial Tobacco Canada Smokes Marlboros

The recent decision by the Federal Court of Appeal in a trade-mark dispute between Imperial Tobacco Canada Limited ("ITL") and Philip Morris Products S.A.1 ("PM") raises complicated legal issues regarding trade-mark infringement and the defences thereto arising from a unique set of cross-border U.S./Canada events.


This decision is the result of a long standing dispute between the parties over ITL's MARLBORO trade-mark. The MARLBORO trade-mark, owned internationally by PM, was acquired by ITL in Canada in the 1930s. Thus although internationally famous and owned and used by PM all over the world, in Canada the mark MARLBORO, by virtue of historical circumstances, is owned in Canada by a competitor ITL. Understandably PM has been trying to get it back from ITL for some time.

Because of the close connection between the U.S. and Canadian market and the extensive advertising of MARLBORO in the U.S which had spilled over into Canada, the MARLBORO mark is known in Canada and often associated with the U.S. brand. Nevertheless, ITL had used and continues to use the MARLBORO brand in Canada for its cigarettes, although in limited quantities.

In the 1980s, PM attempted to expunge ITL's registration for MARLBORO on the grounds that it was not distinctive of ITL. PM presented evidence that a majority of Canadian smokers identified MARLBORO with its U.S. brand. Nevertheless in 1987, the Federal Court of Appeal ruled that in the circumstances, the mark MARLBORO was distinctive in the hands of ITL and that the spill-over effect of American advertising had no legal effect, for to hold otherwise would be to subject Canadian registrants to a "force majeure" over which they had no effective control.2

However outside of Canada, PM still held the rights to the MARLBORO trade-mark and continued to extensively use it in association with a label that included a red roof design ( the "ROOFTOP" trade-marks). In Canada, from about 1958, PM used the ROOFTOP trade-marks with the word MATADOR. However in 2006 PM dropped the MATADOR brand and sold cigarettes in a package containing a combination of the ROOFTOP trade-marks (the "ROOFTOP label") without any other brand name.

In the present action, ITL asserted that the no name ROOFTOP label infringed its trade-mark rights in MARLBORO even though the MARLBORO trade-mark did not appear on the package. PM defended on the basis that it had not used the MARLBORO trade-mark in Canada, that its ROOFTOP label was not confusing with the trade-mark MARLBORO and that its registrations for the ROOFTOP trade-marks were a complete defence to the infringement claim. Both parties challenged the validity of each other's respective registrations.

At first instance, the Federal Court found that PM had not used the MARLBORO trade-mark and therefore was not liable under sections 19 or 22 of the Trade-marks Act3 ("Act"). At trial there was some testimony that many customers refer to the no-name product of PM as "Marlboro" but the court did not consider that there was confusion caused by the ROOFTOP label or the kind of source confusion necessary for a finding of deemed infringement under section 20.

The Court of Appeal agreed with the Federal Court that use of the MARLBORO trade-mark was required to establish liability under section 19 or 22 and that since PM had not used the trade-mark MARLBORO, PM was not liable under those section.

With respect to the claim under section 20, the Court of Appeal found that use of the MARLBORO trade-mark per se was not a requirement and that the Federal Court had erred in its confusion analysis particularly in light of the Supreme Court's intervening decision in Masterpiece.4

On its own analysis of the issue of confusion, the Court of Appeal found that the ROOFTOP label did constitute use of a confusing trade-mark contrary to section 20.

The Court of Appeal reasoned that one of the relevant factors set out by the Act in considering whether two trade-marks are confusing is "the degree of resemblance between the appearance or sound or in the idea suggested by them." [emphasis added]5

While the ROOFTOP label and the trade-mark MARLBORO do not resemble each other in appearance or sound, the Court of Appeal found that they resemble each other in the "idea" they suggested to consumers as a result of the strong association consumers came to have between the ROOFTOP trade-marks and MARLBORO by virtue of their association together on products sold outside of Canada. The Court also suggested that this kind of association, if not strictly an aspect of the resemblance portion of the test is part of the surrounding circumstances relevant to a confusion analysis. The Court rejected the view that an "idea" must be inherently suggested by the respective words or designs and held that such an association of "ideas" can be artificially created by circumstances such as those in this case where the association had been in fact made by consumers in the marketplace.

The resemblance in ideas suggested by the marks and the surrounding circumstance was made more significant where cigarettes are by regulation prohibited from being placed on public view, a so-called "dark market". The Court noted that "in a dark market where the trade-marks are not in view, consumers will use the same name to refer to two different products offered by two different manufacturers."6

The Court found that this "must necessarily result in confusion as to source since consumers expect that products of the same kind, which they can refer to by the same name and buy through the same channels, will come from the same source. It matters little whether this situation is characterized as confusion or reverse confusion, the result is the same."7

In defence, PM argued that its trade-mark registrations for the various components of the ROOFTOP label, which in an earlier part of the decision the Court of Appeal held were not invalid, provided a complete defence to ITL's infringement claims.

The Court held that its finding of confusion was based on a consideration of the entire ROOFTOP label and not any single component thereof. The Court held that since the individual elements of the label were not confusing with MARLBORO, the combination ROOFTOP label, which was confusing with MARLBORO, necessarily conveyed a different message to consumers than the individual elements. Therefore, use of the label could not be considered simple use of any one of the elements. As PM did not hold a registration for the entire combination, the Court held that there was no basis for its defence.


One of the most interesting aspects of this decision is the finding of confusion between two trade-marks that bore no visual resemblance to each other. In order to come to this result the Court relied on a number of very unique facts, for example, the fact that PM did not place any brand name on its ROOFTOP label. Nonetheless, this decision may support claims for trade-mark infringement in cases where there is an association of ideas created by factors that are not directly associated with the words or designs used by the respective parties.

It has always been the case that trade-mark infringement must be judged by the situation in the marketplace, but such infringement will be more difficult to judge a priori where section 20 can be engaged when there is no visual resemblance in the respective marks, where there is no reference to an identical or similar mark by the alleged infringer and where there is an association of products in the mind of customers that can only be established by examining the situation at the point of purchase. One can envision a social media situation in which a trade-mark brand goes viral and comes to be associated with an unrelated trade-mark or image, perhaps even where the association is unintended and not created by the alleged infringer.

It is also interesting to note that the Court relied on the association between the MARLBORO trade-mark and the ROOFTOP label that had been created by circumstances that existed outside of Canada. On considering the distinctiveness of the marks in 1987 the Court gave no weight to these extra-territorial facts. The Court noted in this case that the question of confusion between two marks actually used in Canada is quite different from the issue considered in the earlier case. Whether this constitutes a distinguishing feature or not, the Court of Appeal reached a result consistent with trade-mark law's concern with protecting consumers from confusion by preventing parties from taking advantage of associations that have been created in the minds of consumers, notwithstanding how or where those associations arose. In this case confusion could have been minimized by ending ITL's right to use its MARLBORO trade-mark or by limiting PM's right to use its package design without a distinguishing trade-mark. The Federal Court of Appeal opted for the latter.

Finally, the decision of the Court with respect to defensive registration suggests that companies that use defensive registration as part of their trade-mark strategy should consider registering entire labels even where they already have the constituent parts registered. Otherwise, companies may find that, based on this decision, the defensive protection afforded by their component trade-marks may not extend to the label as a whole.


1 Marlboro Canada Limited v. Philip Morris Products S.A., 2012 FCA 201 ["Marlboro"].
2 Philip Morris Inc. v. Imperial Tobacco Ltd. (1987), 17 C.P.R. (3d) 289, 81 N.R. 28 (F.C.A.), leave to appeal to S.C.C. refused, 20674 (December 17, 1987).
3 R.S.C., 1985 C. T-13 ["Act"].
4 Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387.
5 Act at s. 6(5)(e).
6 Marlboro at para. 84.
7 Ibid.

Link to decision

Marlboro Canada Limited v. Philip Morris Products S.A., 2012 FCA 201

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