Canada: Is E-Commerce Changing The Definition Of Trademark "Use" In Canada?

Several recent decisions of the Canadian courts and the Trade-marks Opposition Board (the “Board”) analyze the impact of e-commerce on claims of trademark “use” in Canada. “Use” is key to both registering and maintaining a trademark registration in Canada.  These decisions are of particular importance to foreign trademark owners seeking trademark protection in the absence of a physical presence in Canada (e.g. a retail establishment or hotel). In both opposition and non-use proceedings, the Board seems to be closely scrutinizing the nature of services offered in Canada when the primary contact with consumers is via the Internet. 

Under section 4 of the Trade-marks Act (the “Act”), a trademark is used in association with services if it is “used or displayed in the performance or advertising of those services.” This has been interpreted to require performance of the services in Canada.  For wares, the trademark must be displayed on the wares themselves, or possibly on point-of-purchase materials and the wares must be sold in Canada in the ordinary course of trade.

Retail Store Services

Historically, “use” of a mark in association with retail store services required a physical presence in Canada - advertising was not enough.  The  cases held that a foreign trademark owner without a brick-and-mortar store in Canada could only claim use if it could perform normal retail services such as taking orders from and shipping goods to Canadians. Listing prices in Canadian dollars on a website, having a Canadian phone number, advertising regularly in Canadian magazines or media with a large Canadian circulation, displaying the Registrant’s name on invoices confirming delivery in Canada, or customizing the website or catalog for Canadians would also help to show “use”. 

In 2011, in an appeal from the decision of the Registrar in a non-use proceeding, the Federal Court held in TSA Stores Inc. v. Registrar of Trade-marks that “services” should be given a liberal interpretation; as long as some members of the public, consumers, or purchasers receive a benefit from the activity, it is a service.  In this case, the registrant did not own any stores in Canada (stores had been operated, but closed) but filed evidence that very significant numbers of Canadians accessed its website.  The Court held that a trademark registration for retail store services could be maintained in the absence of a brick-and-mortar store in Canada, even without evidence of Canadian purchases from the website. The TSA website provided information such as the “Help Me Find Gear,” “Shoe Finder” and “Store Locator” tools; the Court found that these ancillary retail store services offered an experience akin to visiting a brick-and-mortar store and benefitting from a discussion with a knowledgeable salesperson. The Court found that this was a benefit to the public, so it was a service. The registration was maintained.

In contrast, in Lapointe Rosenstein LLP v. West Seal Inc., the Registrar interpreted the TSA decision narrowly, expunging West Seal’s trademark ARDEN B, registered in association with retail apparel store services and a variety of clothing-related wares. West Seal did not have facilities to ship merchandise internationally.  Canadian customers ordering from the website used a third-party shipping company to deliver the purchased items to Canada. The Registrar found this insufficient; absent evidence that the registrant itself shipped orders made through its website to Canada, the services were not performed in Canada

The Registrar also held in Poltev v. MMI-GOC LLC that the mere registration and operation of a “.ca” domain name does not, in itself, constitute use of a trademark for services in Canada.

Hotel and Travel-related Services

A recent non-use proceedings decision, Bellagio Limousines v. Mirage Resorts Inc., adds a new wrinkle to issues of trademark use for hotel and travel-related services in the absence of a physical location in Canada.

At issue was whether two trademark registrations owned by Mirage Resorts Incorporated (“Mirage Resorts”) relating to the Bellagio Hotel in Las Vegas were used in Canada.  One registration covered: (1) promotional and guest relations services, namely hotel and casino reservation and booking services; (2) casinos and live entertainment services; and (3) hotels, beauty salons, and health spas.  The other covered ladies’ clothing, sportswear and clothing accessories.

Mirage Resorts’ evidence showed that it operates the Bellagio Hotel in Las Vegas, and spent significant sums to advertise and promote the BELLAGIO mark in Canada, particularly through its website. Numerous Canadians visit the hotel each year and book vacations through the website.  Further evidence from a Toronto-based travel agent attested that he visited the Bellagio hotel and booked vacations there for Canadian clients.

Even though the BELLAGIO mark was well-known in Canada, Mirage Resorts’ advertising and promotion was not enough to amount to use of “hotel services”, since it did not actually operate a hotel in Canada. According to the Registrar, “while technology has progressed to the point where one can enjoy the retail experience without ever having to leave one’s home, there is no evidence that hotel services have made such progress; a brick-and-mortar presence in Canada is required for hotel services. A hotel cannot operate via the internet or a 1-800 telephone number.” The registration was maintained only for “promotional and guest relation services, namely hotel and casino reservation and booking services.”  This decision indicates that the Board will take a narrow view of hotel services: a trademark owner must be able to show that it is ready, willing, and able to perform the services in Canada. Even very well-known marks cannot be maintained on the basis of Canadian promotional activities alone, notwithstanding that many Canadians visited the hotel.

These decisions, and others, demonstrate the importance of the specific wording used to describe the services used.  For example, in Venice Simplon-Orient-Express, Inc. v. Société Nationale des Chemins de fer Français SNCF, the Registrar maintained the registration ORIENT EXPRESS covering “travel services, namely railway and passenger service” despite the fact that the Registrant did not have a place of business in Canada, and operated the rail service only in Europe.  The Registrant delivered seminars to Canadian travel agents, who then made reservations for their Canadian customers on the Registrant’s European trains.  The Federal Court maintained the registration on appeal, holding that “travel services, namely railway passenger service,” encompass incidental or ancillary services such as train ticketing and train reservation services, even when provided through an intermediary Canadian travel agency.

In 2006, the Registrar maintained another registration for “hotel services” in Borden Ladner Gervais LLP v. WestCoast Hotels, Inc.  The Registrant showed that Canadians made reservations on its website for WESTCOAST hotels in the United States, and participated in the Registrant’s loyalty program in Canada. Importantly, the Registrant had recently licensed the mark as a secondary or house mark for hotels in Canada.  The Registrar found that “hotel services” should not be narrowly interpreted; the performance of reservation services and of loyalty program services both constituted the performance of hotel services. 

Last year, the Federal Court reinforced this approach in Homeaway.com, Inc. v. Hrdlicka.  Homeaway.com sought to expunge the mark VRBO for “vacation real estate listing services” on the basis of its prior use of the identical mark for identical services, and on the basis of the trademark owner’s fraudulent statements to the Trade-marks Office.  The Court expunged the mark, finding that Homeaway.com possessed valid prior rights through its U.S.-based website. Facts also showed that Canadians listed rental properties and made bookings using the website. On this basis, Justice Hughes stated that a trademark which appears on a computer screen website in Canada, regardless of where the information may have originated from or be stored, constitutes for purposes of the Trade-marks Act use and advertising in Canada.

Recommendations for Trademark Owners

In the absence of sales to Canadians and a Canadian retail location, a foreign registrant bears a heavy burden to show that its website is directed to Canadians, and mimics a traditional retail store experience with significant interactivity akin to visiting a brick-and-mortar store.  In order for the owners of trademarks covering retail services to show that they are ready, willing, and able to perform the registered services in Canada, they should consider whether: 

  •  the customer purchased and took delivery of goods in Canada (items purchased online, by catalogue, or telephone must be delivered to Canadians, in Canada, by the registrant or its agent rather than by a third party);
  • there is a Canadian website or catalogue;
  • the listing prices are in Canadian dollars;
  • a Canadian phone number is provided;
  • the trademark is advertised in Canadian publications or in publications with a large Canadian circulation; and
  • the registrant’s name is displayed on invoices confirming delivery in Canada.

In terms of obtaining or maintaining trademark registrations for “hotel services” where the registrant does not operate a hotel location in Canada, trademark owners should consider:

  • always specifically including “reservation services” in the application;
  • licensing their mark to local businesses; and
  • making loyalty programs available to Canadian website users, and keeping track of the number of Canadians enrolled in such loyalty programs.

It is important to recognize that many of these decisions arise in summary non-use proceedings, where the Registrar exercises limited discretion, and can only determine if there has or has  not been “use” as described in the Trade-marks Act. These same issues may arise in opposition proceedings, and can impact the enforceability of a trademark registration. In contrast to the Board’s position, the Federal Court and Federal Court of Appeal have recognized that the existence of goodwill does not depend on use in Canada; a foreign trademark owner may have valid goodwill subsisting in its mark, despite the fact that it does not conduct business in Canada.

Further commentary from the Courts will be needed to clarify the issue of if and when online trademark use, in the absence of a physical presence in Canada, constitutes “use” 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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Authors
Noelle Engle-Hardy
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