Canada: SC Denies Request For Leave To Appeal Decision Preventing Sale Of No-Name Cigarettes

The Supreme Court of Canada has denied Philip Morris's request for leave to appeal the precedent-setting decision of the Federal Court of Appeal in Imperial Tobacco Canada Limited v Philip Morris Products SA.

In 2012 the Court of Appeal overturned a lower court decision and held that Philip Morris had infringed the registered Canadian trademark MARLBORO - owned in Canada by Marlboro Canada Limited and licensed to its related company, Imperial Tobacco Canada Limited - by selling no-name cigarettes in packages incorporating the well-known red-and-white packaging trade dress of Philip Morris's international Marlboro brand.

The case involves a unique set of facts, and a long history between the parties.

By way of background, Philip Morris' Marlboro product, with its well-known red-and-white ('red roof') package design, is the top-selling cigarette in the world. However, in the 1930s, a predecessor to Philip Morris sold the MARLBORO mark in Canada to a predecessor of Imperial Tobacco and, since that time, a Marlboro cigarette product has been sold that is unique to Canada.

Since the 1950s, Philip Morris has made various attempts to reacquire the Canadian rights to the MARLBORO mark. In addition, in the 1980s Philip Morris unsuccessfully sought to expunge the MARLBORO registration alleging a lack of distinctiveness in view of extensive knowledge in Canada of Philip Morris' international brand.

Subsequently, and as a result of not having rights to the MARLBORO mark in Canada, Philip Morris for many years sold a product in Canada using the 'red roof' design package, but in association with other names such as Matador or Maverick. However, in 2006 Philip Morris launched a new product in Canada using a package with the 'red roof' design elements but with no brand name. This was the first time in the world that a cigarette product was offered for sale in a package with no brand name. Along with the 'red roof' design elements, the package also displayed the phrase "World Famous Imported Blend". At around the same time, Canada imposed a 'dark' market for cigarettes, as they were no longer visible at retail and consumers had to request products by their brand name.

At first instance, the trial judge had found that there was a significant degree of confusion with a large number of consumers as to how to refer to the no-name trade dress, associating it with the Philip Morris Marlboro product. However, for reasons that were subsequently considered to be in error by the Court of Appeal, the trial judge ultimately held that this did not constitute infringement of the MARLBORO word mark.

The Court of Appeal overturned the trial judge's decision and emphasised that one of the relevant factors for assessing confusion under the Canadian Trademarks Act is "the degree of resemblance between the trademarks... in appearance or sound or in the idea suggested by them".

Although there was no resemblance in appearance or sound between Imperial Tobacco's MARLBORO mark and Philip Morris' packaging, the Court of Appeal recognised that, in a 'dark' market where the products are not visible, consumers may ask for it by using words that are "not necessarily displayed on the product". The Court of Appeal also found that Philip Morris "intentionally conveyed" this association by using the 'red roof' design elements on their packaging. The court concluded that consumers would use the same name to refer to two different products offered by two different manufacturers, and that this "must necessarily result in confusion...". As a result, Philip Morris was enjoined, ordered to destroy all offending packaging, and to pay damages or an accounting of their profits.

While this case involved unique and specific facts, the Supreme Court of Canada's dismissal of Philip Morris application for leave may open the door for enhanced protection for trademark owners, in all areas of commerce, that seek to prevent the use of a confusing trade dress.

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.

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