Canada: Trade-marks Year In Review 2012

This review will focus on several trade-mark related decisions of the Federal Court (FC) and the Federal Court of Appeal (FCA) in 2012.

Infringement/Passing Off

Philip Morris sells MARLBORO cigarettes internationally in association with red Rooftop packaging. It began selling cigarettes in Canada using the red Rooftop design elements, but without reference to MARLBORO. Marlboro Canada issued a demand letter alleging infringement of its registered trade-mark MARLBORO. In response, Philip Morris sought a declaration that the sale of the ROOFTOP cigarettes did not contravene any of the rights of Marlboro in its MARLBORO mark. Marlboro responded with a counterclaim alleging trade-mark infringement.

Marlboro claimed that the use of the ROOFTOP design with no name called MALBORO to mind, creating a form of reverse confusion. While there was evidence of an association that some customers made between Rooftop cigarettes and Malboros, the FC held that the association was not problematic because the association was with the plaintiff’s international Malboros, and not with the defendant’s Canadian Malboros.

The FCA overturned the decision and found that use of the MARLBORO mark was not a requirement to establish infringement: Malboro Canada Limited v. Philip Morris Products S.A.1

The FCA held that:

  • While the ROOFTOP label and the MARLBORO trade-mark had no visible resemblance to each other, they resembled each other in the “idea” suggested to consumers as a result of the strong association consumers have between the ROOFTOP and MARLBORO trade-marks by virtue of their association together on products sold outside of Canada;

  • Such an association of “ideas” can be artificially created by circumstances such as those in this case where the association had been made by consumers in the marketplace;

  • The resemblance in ideas suggested by the marks was made more significant in this case because the cigarettes were, by regulation, prohibited from being placed in public view. 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.” 

Philip Morris argued that its trade-mark registrations for the various components of the ROOFTOP label provided a complete defence to the infringement claims. The FCA held that, while the registrations were valid, its finding of confusion was based on a consideration of the entire ROOFTOP label and not any single component. As there was no registration for the entire combination, the FCA rejected the defence. An application for leave to appeal to the Supreme Court of Canada is pending.

In BBM Canada v Research and Motion Ltd,2BBM brought an application alleging that the use of BBM by Research in Motion (RIM) constituted  infringement, passing off and depreciation of goodwill in the registered trade-marks of BBM Canada. The FC disagreed and dismissed BBM Canada’s application.

The FC noted the distinction in services between BBM Canada and RIM. BBM Canada is in the business of supplying impartial television and radio ratings data and analysis to Canadian broadcasters and advertisers. In contrast, RIM is a designer, manufacturer and marketer of wireless solutions for the global mobile communications market. The FC held that:

  • Confusion must be assessed by reference to the “average person” likely to consume the wares or services in question;

  • The services of BBM Canada, namely sophisticated market research, do not overlap or lead to direct competition with RIM and its BBM service;

  • The consumers of the services of BBM Canada are a defined group of advertisers, most of whom are long-standing members of BBM Canada. If a likelihood of confusion is to be found, it must be from among this group.

The Court found no likelihood of confusion. An appeal is pending before the FCA and was heard on January 17, 2013.

Expungement Proceedings

Mr. Hrdlicka registered the mark VRBO for use with vacation real estate listing services. In a strongly worded decision, Justice Hughes ordered the registration expunged: Homeaway.com Inc. v. Martin Hrdlicka.3

Homeaway is a U.S. company offering vacation real estate listing services under the VRBO mark. It maintained a database, physically located in the U.S., but the VRBO mark was displayed on users’ computer screens in Canada and elsewhere. The FC held that “a trade-mark which appears on a computer screen website in Canada, regardless where the information may have originated from or be stored, constitutes … use and advertising in Canada.” The FC went on to conclude that Homeaway had established prior use of its mark in Canada. As for Mr. Hrdlicka, there was no evidence that he had ever used the mark in Canada. Further, he admitted that he was aware of Homeaway and its use of VRBO at the time he filed his application. The FC found that, “[h]is intent was to extort money or other consideration from Homeaway. Such activity should not be condoned or encouraged.” The registration was expunged.

In Precision Door & Gate Service Ltd v. Precision Holdings of Brevard Inc.,4 the applicant was successful in its application to expunge the respondent’s registered trade-marks. The respondent obtained registration for various trade-marks containing the word PRECISION for use with overhead door sales and service. When it applied for these trade-marks in 2002, it was unaware of the existence of Precision Door. In 2005, the parties became aware of each other. The applications issued to registration in 2009 and the applicant brought its motion to expunge in 2010. In ordering the registrations expunged, the FC found that the applicant had established prior use of a confusing mark. The FC rejected the respondent’s argument based on acquiescence. The FC noted that it is an open question as to whether or not acquiescence can be raised on an application for expungement, but that in any event, the evidence did not show acquiescence. To succeed, the respondent  would have to show that the applicant did something more than just delay its challenge to the registrations. There must be proof that the applicant’s conduct encouraged the respondent to believe that the applicant did not intend to enforce its rights, and that the respondent relied on this belief to its detriment. The burden was not met in this case.

Opposition Appeals

Iwasaki Electric Co. Ltd. v. Hortilux Schreder B.V.5 dealt with the issue of prior use of a mark by an opponent, in this case Hortilux Schreder (HS). Iwasaki applied to register the trade-mark HORTILUX based on use in Canada since at least as early as December 31, 1997 in association with electric lamps. HS opposed on various grounds, and relied on its prior use of HORTILUX in Canada in association with lighting apparatus and lamp reflectors. It was unsuccessful before the Opposition Board.

The Board held that there was no evidence of use of HORTILUX by the HS prior to Iwasaki’s date of first use. HS’s evidence consisted of invoices for lighting reflectors, the earliest of which was dated August 26, 1997. The Board rejected the invoices on the basis that the mark did not appear in the body of the invoices and there was no evidence that the mark appeared on the wares or on their packaging.

HS also alleged that Iwasaki had not used the mark in Canada as of December 31, 1997. Iwaskai relied on a sale of two units for zero value on October 15, 1997. The Board acknowledged that zero-value sales have been regarded as use in the normal course of trade, as long as there are subsequent patterns of sales of the items, and rejected the opposition. The FC disagreed on both counts.

While a sale for zero value could constitute use in the normal course of trade, it was incumbent on Iwasaki to provide:

  • A statement that the transaction was in the normal course of trade;

  • An explanation regarding what constitutes the normal course of trade with respect to the wares in issue, and specifically whether the normal course of trade involves the providing of wares for zero value;

  • An explanation regarding whether the providing of wares for zero value was part of the regular practice of the parties; or

  • An explanation regarding the purpose of the zero-value wares, including whether it was intended that wares would be used for marketing, informational and/or promotional purposes.

Without such evidence, the FC concluded that the Board erred in rejecting the opposition. The FCA did not need to address this issue on appeal, but noted that its failure to do so “should not be interpreted as an agreement (or disagreement) with the conclusions of the judge in relation to whether Iwasaki first used the Mark in October 1997.”

With respect to the prior use of HORTILUX on invoices, the FC concluded that the Board was in error and noted that there were several factors to consider when deciding if the use of a mark at the top of an invoice constitutes use in association with the wares listed in the invoice, namely:

  • The mark should be prominent;

  • It should not be used in the context of corporate identification but rather should stand apart from the corporate address and contact information;

  • It should be clear to the purchaser of the wares that the mark is associated with the wares; and

  • No other mark should appear on the invoice in association with the wares.

The FC concluded that the invoices established prior use of the mark. The FCA agreed.

Iwasaki argued that, even if there was prior use of HORTILUX, such use had been abandoned in December 1997 when the HS adopted the mark HORTILUX SCHREDER. The FC disagreed, noting that the evidence did not suggest any intention to abandon the mark. The FCA agreed:

… abandonment of a trade-mark is not determined based solely on a person ceasing to use that trade-mark. The person must also have intended to abandon the trade-mark. I would agree that in determining whether a person has an intention to abandon a trade-mark, an inference of such intention could, in the absence of any other evidence, be drawn as a result of a failure to use the trade-mark for a long period of time.

However, there was other evidence in this case as noted by the judge … Even though these examples are not examples of the use (as defined in the Act) of the Mark in association with the wares, these examples support a finding that Hortilux Schreder did not intend to abandon the Mark at January 9, 2002.

Canadian Council of Professional Engineers v. Kelly Properties LLC6 dealt with the registrability of KELLY ENGINEERING RESOURCES for use with personnel employment services, namely, providing education and/or training to temporary, temporary to full-time, and full-time employees having specialized technical skills. The opponent argued, among other things, that the mark was either clearly descriptive or deceptively misdescriptive. The FC concluded that the Board was correct in its conclusion that the mark was not clearly descriptive, but went on to conclude that the mark was deceptively misdescriptive. The FC noted that the mark implies that Kelly is entitled to provide employment services to engineers and companies seeking to employ engineers, but that it is not necessarily licensed to provide such services in provinces where a licence is required. The FC also noted that there is a risk that a customer seeking to hire a qualified engineer may end up hiring an engineer qualified in another jurisdiction and not licensed to practice in Canada in violation of various engineering profession statutes:

I find that the acceptance of the trade-mark application runs the risk of opening up the door to abuse, thereby placing the public interest at risk, the protection of which lies at the core of the regulation of the engineering profession in Canada. This accentuates the importance that a trade-mark used in a field related to engineering not be deceptively misdescriptive or of such a nature as to deceive the public in a manner that ultimately offends the public order.

Section 45 Appeals

Trade-mark owners must control, either directly or indirectly, the character or quality of the wares or services offered in association with a licensed trade-mark. The FCA, in Spirits International B.V. v. BCF,7 provides some insight into the quality of evidence of control required for use of a mark by a licensee to accrue to the owner’s benefit when control is exercised indirectly. This decision represents another instalment in the FCA’s recent jurisprudence on licensing.

Spirits International owns the Canadian registration for the trade-mark MOSKOVSKAYA RUSSIAN VODKA & Design for use with vodka. The registration was challenged for non-use. The FC affirmed the Registrar’s decision to expunge the registration for failure to provide evidence of use during the material period. Central to the FC's decision was whether use of the mark by a related company accrued to the benefit of Spirits International.

Before the Registrar, Spirits International filed evidence alleging that a group of related corporations which included Spirits International had used the mark during the relevant period. The FC took the position that a bare assertion of use in Canada by a group of companies, even if the group includes the owner, is not sufficient to demonstrate use by the owner:

"… 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 FCA did not disagree with this statement. However, the FCA was of the view that the evidence, when considered as a whole, was sufficient to establish the requisite control:

  • The related corporation was licensed by Spirits International to use the mark in association with the wares sold in Canada during the relevant period;

  • Spirits International, pursuant to a licence, set the standards of character and quality of the wares sold under licence (by delegating to other corporations within the related group of companies the task of periodic testing for compliance with these standards); and,

  • The mark was affixed to wares which had been tested under and met the standards of character and quality set by the licence and which were sold in Canada during the relevant period.

This decision also affirms that a trade-mark owner can delegate the function of control to a related company: Spirits International’s delegation, to a related company, of the task of monitoring compliance to the standards set under the licence was not fatal to the licence, having regard to the totality of the evidence before the Court.

An application for leave to appeal to the Supreme Court of Canada was dismissed.

Examination Appeals

In Ontario Teachers’ Pension Plan Board v. Attorney General of Canada,8 the FCA dealt with the registrability of the word TEACHERS’ for use with “administration of a pension plan, management and investment of a pension fund for teachers in Ontario.” The Registrar refused the application noting the word TEACHERS’ should be left available for others to use “since descriptive words are the property of all and cannot be appropriated by one person for their exclusive use.” The FC upheld the Registrar’s decision:

... the decision maker must not only consider the evidence at his or her disposal but also common sense in the assessment of the facts. Therefore, in assessing the validity of a proposed trade-mark, one must consider not only the evidence but have regard to common sense. Moreover, the decision that the trade-mark is clearly descriptive is to be based on the initial impression having regard to the wares or services in question …

When one thinks of a pension fund, one is just as likely, or more likely, to think of the pensioner or prospective pensioner than the administrator or the manager. That is, one would more readily think of whom the pension plan is for, in this case the teachers, rather than who the pension fund is administered by, the financial managers. Certainly, the people described by the applicant as the possible end consumers of the services it provides, the Ontario teachers, would readily consider, on first impression, the proposed trade-mark as describing their pension fund.

In my view, the first impression created by the proposed trade-mark, TEACHERS’, considering the context of a pension plan, the pension fund itself and the services provided by the applicant, is that the proposed trade-mark describes a prominent characteristic of a pension fund for teachers and is caught by subsection 12(1)(b) as being clearly descriptive even though it does not describe the administration, management or investment of the pension funds in question.

The decision was upheld by the FCA:

Thus, the question which arises is what impression the word TEACHERS’, understood in its proper context, would make in the mind of a normal or reasonable person. In my view, such a person would readily understand that the appellant administers a pension plan for teachers and provides management and investment services for a pension fund for those teachers. In other words, when one looks at the word TEACHERS’ as it is used in association with the appellant’s services, the conclusion which would clearly come to the mind of the reasonable person is, in my respectful opinion, that the pension plan is that of teachers and that the management and investment services offered in regard to the pension fund are management and investment services for the exclusive benefit of teachers.

Thus, a reasonable person requires neither effort nor imagination to conclude that the appellant’s trade-mark clearly describes the character of the services that it offers. There is no element of incongruity present. The qualities of the appellant’s services are instantly apparent and no multiple-step reasoning is necessary for the reasonable person to determine what service characteristics or qualities the trade-mark suggests. From that perspective, it cannot be argued that the trade-mark is in any way suggestive, nor does the appellant make any such argument. In other words, the only possible meaning of the word TEACHERS’, when used in association with the appellant’s services, is one that is plain, self-evident or manifest.

Another interesting appeal from the Examiner involved Sound Marks and resulted in an announcement that Sound Marks are now registrable in Canada. This is a major new development after a decades long battle over the Roaring Lion Sound Mark of Metro-Goldwyn-Mayer (MGM).

MGM applied to register the Roaring Lion Sound Mark (submitting both a drawing and a sound recording) in 1992. In refusing the application, the Registrar did not reject the concept of a sound as a mark. Rather, the Registrar focussed on the technical issue of how to provide an accurate representation of a sound mark. He took the position that a drawing was not an accurate representation of the mark but the decision made no mention of the sound recording submitted with the application.            

MGM appealed to the FC and the appeal was allowed on the basis of a consent motion made by the Attorney General of Canada (AG).9 The AG took the position that the Registrar erred in concluding that there was no accurate representation of the mark. The AG took the position that the Registrar ought to have accepted the visual representation of the mark in combination with the other material submitted by MGM including the sound recording.

Following from the Court order, a Practice Notice was issued governing applications for Sound Marks and providing that such applications shall contain: 

  1. A statement that the application is for the registration of a Sound Mark;

  2. A drawing that graphically represents the sound;

  3. A description of the sound; and

  4. An electronic recording of the sound.

The MGM mark has issued to registration and there are now 19 applications pending.

Section 9 Marks

Maple Leaf Foods Inc v Consorzio Del Prosciutto Di Parma10 was an appeal of a decision of the Registrar refusing the applicant’s application to register the trade-mark PARMA & Design. In 1994, Maple Leaf applied to register PARMA & Design for lunch meats. In 1998, public notice was given by the Registrar of the adoption and use of Parma & Design as an official mark in the name of the Consorzio. The official mark was then cited as an obstacle to registration of the Maple Leaf application. Maple Leaf sought judicial review of the decision. The issue was whether the Registrar erred in granting public notice of the adoption and use of the official mark by the Consorzio. Maple Leaf submitted that the Consorzio was not entitled to official mark protection because it was never subject to control exercised by a Canadian government which is a necessary requirement to possess a valid official mark. The FC agreed the official mark was declared void ab initio.

In Cable Control Systems Inc. v. Electrical Safety Authority11 the FC considered the quality of evidence required to show adoption and use of an official mark. ESA sought public notice of the adoption and use of DIG SAFE as an official mark. It submitted a copy of its Spring 2010 newsletter which showed the official mark in an article promoting DIG SAFE month. The FC held that to satisfy the statutory requirement of adoption and use, the public authority must demonstrate that the official mark was made available for public display. The newsletter met this requirement. However, CGS went on to argue that the article was simply a promotion of the activities of others and not of ESA. The FC concluded that the evidence established that the mark was used by ESA as well as others participating in the public education and safety campaign, but that use of the mark by others did not disentitle ESA from acquiring the official mark.

Conclusion

There were many interesting trade-mark cases in 2012 — this review has canvassed just a few of the more interesting decisions.          

Footnotes

1 2012 FCA 201

2 2012 FC 666

3 2012 FC 1467

4 2012 FC 496

5 2012 FCA 321

6 2012 FC 1344

7 2012 FCA 131

8 2012 FCA 60

9 T-1650-10

10 2012 FC 416

11 2012 FC 1272

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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