Canada: The Channels Of Trade

Last Updated: October 13 2014
Article by John McKeown

In a recent case involving a determination of whether one mark was confusing with another it was concluded that the respective channels of trade for both the parties' wares was of critical importance.

The Facts

Hayabusa Fightwear Inc. ("HFI") is a Canadian company that designs and sells specialized fightgear and fightwear in the field of mixed martial arts. HFI filed a trademark application to register the trademark HAYABUSA (which means "peregrine falcon" in Japanese) based on proposed use. The statement of wares reads as follows:

Clothing, namely: t-shirts, polo shirts, sports jerseys, shorts, compression shorts, compression shirts, vests, sweatshirts, kimonos, martial arts uniforms, track suits, warm-up suits, singlets, wrap belts for kimonos, sandals and grappling shoes.

Suzuki Motor Corporation ("SMC") opposed the application on the basis that the HFI mark was confusing with the SMC's registered trademark HAYABUSA, registered in association with motorcycles and fittings. In addition SMC alleged that HFI was not entitled to registration of its mark because the mark was confusing with SMC's registered mark and the use of the SMC mark on an unregistered basis in association with headwear, namely caps and hats.

The Decision of the Trademark Opposition Board

The Hearing Officer concluded that HFI had not met its burden of proving, on a balance of probabilities, the absence of confusion since the probabilities of confusion between the respective marks was evenly balanced between a finding of confusion and of non-confusion. Even if the channel of trade of SMC was restricted based on the fact that the SMC registration was known more for motorcycles than for caps, this factor would not have been sufficient to shift the balance in favour of the Applicant. As a result the opposition was allowed and the application dismissed.

The Appeal

HFI appealed the decision to the Federal Court and filed additional evidence relating to its business.

The standard of review for such an appeal is reasonableness, unless the new evidence filed would have materially affected the Board's findings. The judge found that the new evidence submitted was not material. As a result, under the "reasonableness" standard of review a judge should only intervene if the decision of the Board was not reasonable in the sense that it was not within the range of possible, acceptable outcomes that are defensible in respect of the facts and the law.

The evidence made it clear that HFI products were sold to mixed martial arts enthusiasts and SMC products were only sold in Canada through authorized Suzuki dealers.

The judge provided a summary of the basic principles relating to trademark confusion. First, a trademark is meant to signal, in the mind of an average consumer, an association between a product and its source. Under the Trademarks Act, the use of a trademark causes confusion with another trademark "if the use of both trademarks in the same area would be likely to lead to the inference that the wares associated with those trademarks are manufactured or sold, by the same person, whether or not the wares are of the same general class.

Second, the perspective from which the likelihood of a mistaken inference is to be measured is the mind of the mythical customer, a casual consumer somewhat in a hurry, who does not pause to give the matter any detailed consideration or scrutiny or, in other words, as a matter of first impression.

Third, when applying the test for confusion, the hearing officer or the court must have regard to all of the surrounding circumstances, including (a) the inherent distinctiveness of the trademarks and the extent to which they have become known; (b) the length of time the trademarks have been in use; (c) the nature of the wares, services or business; (d) the nature of the trade; and (e) the degree of resemblance between the trademarks in appearance or sound or in the ideas suggested by them.

When the Judge applied these principles he found that it was clear that the respective channels of trade for both the parties wares were of critical importance. When the Hearing Officer failed to give emphasis to this factor she made a reviewable error on the standard of reasonableness. This was particularly important since SMC's use of its mark in association with headwear, namely caps and hats was on an unregistered basis. As a result the Judge allowed the appeal and dismissed the opposition.

Comment

The statutory factors mentioned above are not limiting and different circumstances will be given different weight in a context-specific assessment. The circumstances of each case dictate how each factor should be treated and the weight to be given to each of the factors. The degree of resemblance is often likely to have the greatest effect on the confusion analysis. The other factors become significant only once the marks are found to be identical or very similar. This case turned on the nature of the trade which was quite different for the respective products of the parties.

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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