Canada: Permitted Exclusive Use Of English Trademarks In Québec: Magasins Best Buy Ltée, Costco Wholesale Canada Ltd. Et Al v. Québec

Last Updated: April 17 2014
Article by Sophie Gupta

Most Read Contributor in Canada, September 2018

For any business seeking to sell its products or offer its services in the Province of Québec, the carrying out of such activities and the way in which such businesses operate generally are profoundly affected by the enduring linguistic restrictions imposed by the Québec Charter of the French Language 1 (the "Charter"). Adopted by the Québec National Assembly in 1977, the Charter's stated objective is to safeguard the quality and influence of the French language in both the workplace and as the language of commerce. In the area of business and commerce, the Charter requires that business names, packaging labeling, the publication of brochures, catalogues and other similar documents, as well as the display and use on public signs and posters and in commercial advertising, be in French and, where permitted by the Charter, if also in another language other than French, that the French portion be at least equal to that of the other language or, in the case of commercial advertising, public signs and posters, that French be predominate.

The Charter, however, together with the Regulation Respecting the Language of Commerce and Business2 (the "Regulation"), do provide for a number of exceptions. Among them is the exception set out at section 25(4) of the Regulation which allows for recognized "trade-marks" within the meaning of the Trade-marks Act3 to appear on public signs and posters and in commercial advertising in a language other than French, except where a French version has been registered.

In 2009, the Superior Court of Québec, in the case of Centre sportif St-Eustache v. Québec (Procureur général)4, decided against the owner of a large sports complex who claimed his use of the term "Bowl-Mat", despite not being a registered trade-mark, fell within the exception of section 25(4) of the Regulation as it should be regarded as a "trade-name".  The Court pointed to the complexity in dealing with trade-marks and trade-names in the context of a Charter application as, while the Trade-marks Act grants some protection to both, the exception in the Regulation applies only to trade-marks and not to trade-names. What remained unclear until this week, however, was whether the section 25(4) exception granted the owner of a registered trade-mark to use such intellectual property exclusively in such other language, that is, without the accompaniment of a French translation or any generic French language.

In light of such uncertainty, in November of 2011, the Office québécoise de la langue française (the "OQLF") initiated a campaign to strongly encourage, save require, businesses to include French generic terms when using  their non-French trademarks in commercial advertising and on public signs. The campaign, known as "A Trade-mark to Respect the Law" seem to suggest that failure to do so constituted a violation of the Charter, thereby exposing those who did not comply to monetary and penal sanctions and, in some instances, the potential suspension of francization certificates which are granted by OQLF to demonstrate that a business has met the Charter's linguistic requirements.

Québec and foreign-based business, including, among others, Magasins Best Buy Ltée, Costco Wholesale Canada Ltd., Gap (Canada) Inc., Old Navy (Canada) Inc., Corporation Guess? Canada, La Compagnie Wal-Mart du Canada, Toys "R" US Canada Ltée and Curves International, Inc. (the "Applicants"), strived, unsuccessfully, to convince the OQLF that their current practice of using of their non-French trademarks was in fact permitted by section 25(4) of the Regulation, the OQLF maintained its position that the use of a trade-mark on storefront and other such public displays was in avertedly equivalent to the use of such businesses' commercial names, which, pursuant to the Charter, may only be used in a language other than French if generic French language is also used in accompaniment.

The OQLF's position, if upheld, would have meant that companies doing business in Québec would have been obligated to undertake French-branding and positioning efforts and revaluate marketing strategies, to say nothing of the imposition of a tremendous added cost and potential deterrence for businesses not yet established in Québec to do so.

Analysis

Upon declaratory judgement sought by the Applicants, the Québec Superior Court (the "Court"), in the case of Magasins Best Buy Ltée, Costco Wholesale Canada Ltd. et al v. Québec (Procureur général)5, ruled in favour of the Applicants and declared that the exclusive use of trade-marks in a language other than French without any French generic language was authorized if no French version of such trade-mark is registered.

In reaching its decision, the Court also considered that many of the Applicants' trade-marks were in fact being used not by the owners of the trade-marks themselves, but rather by franchisees who had been granted a license for their use. Given that Québec law prohibits businesses from using commercial names that run the risk of creating confusion with another business but allows the concurrent use of a trade-mark by more than one business, the Court confirmed the Applicant's position that their trade-marks were distinct from their commercial names.

With regards to the distinction between trade-names and trade-marks, the Court highlighted the Supreme Court of Canada's characterization in Kirkby v. Ritvik Holdings6 confirming that "[i]n the case of trade-marks, the focus shifts from the product itself to the distinctiveness of its marketing. Trade-marks seek to indicate the source of a particular product, process or service in a distinctive manner, so that, ideally, consumers know what they are buying and from whom." The Court noted that trade-marks were a matter of federal jurisdiction, governed by rules independent from that of the Charter or the Regulation,  and that moreover, the Conseil de la langue française had never recommended to amend either the Charter or section 25(4) of the Regulation to require that trade-marks written in a language other than French be translated or accompanied by French generic language.

The Court distinguished the judgment in Centre-St-Eustache from the legislative exception in highlighting that "Bowl-Mat" was not a trade-mark pursuant to the Trade-marks Act,   whereas, in the case at hand, the Applicants' brands were duly registered trade-marks and that no French version of any such trade-mark had been filed. The Court expressly stated that it would not opine as to what the outcome of the case would have been if the Applicants' trade-marks had not been registered, thereby potentially leaving the door open for further debate and, in turn, highlighting the importance for companies seeking to do business in Québec to undertake to protect their intellectual property by registering their trade-marks.

Significance

This case is significant for companies, Québec and foreign based alike, doing business in Québec and, perhaps most notably, for actors in the retail industry looking to use their established, well recognized non-French brands in Québec. While the Charter was previously clear with regards to the protection granted to trade-marks, section 25(4) of the Regulation was both imprecise and incomplete in relation to the reach of its exception, thus making it vulnerable to an OQLF interpretation that was unfavourable to businesses. While the Court recognized the importance of ensuring the quality and influence of the French language in both the workplace and as the language of commerce, it made clear that registered trade-marks which are in a language other than French and which do not include generic French language or for which a French version has not been registered, can be used on public signs and posters and in commercial advertising in Québec without any worry of contravening the Charter.

Other Relevant Publications

Those interested in learning more about the obligations stemming from the Charter of the French Language may also be interested in consulting a previous McCarthy Tétrault publication entitled " The Usage of French in Enterprises: Bill 14"7. 

For further information regarding this issue and the Magasins Best Buy Ltée, Costco Wholesale Canada Ltd. et al v. Québec case, please see our Consumer and Retailer Advisor blog.

Footnotes

1. Charter of the French Language, chapter C-11

2. Regulation Respecting the Language of Commerce and Business, chapter C-11, r.9

3. Trade-marks Act (R.S.C., 1985, c. T-13)

4. Centre sportif St-Eustache v. Québec (Procureur général),  2009 QCCS 3307

5. Magasins Best Buy Ltée, Costco Wholesale Canada Ltd. et al v. Québec (Procureur général), 2014 QCCS 1427

6. Kirkbi AG v. Ritvik Holdings Inc., [2005] 3 S.C.R. 302, 2005 SCC 65

7. N.B. Bill 14, which is incidentally discussed in that publication, was adopted in principle, but has not been sanctioned as of today.

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