Canada: The Impact Of Concurrent Use Of Allegedly Confusing Trademarks

Last Updated: January 14 2016
Article by John McKeown

A recent decision of the Federal Court dealt with a claim for passing-off and trademark infringement.

The Facts

The Plaintiff

Scott Technologies, Inc. ("Scott Technologies") manufactures and distributes self-contained breathing apparatus ("SCBA") which it markets to fire departments and others. A significant part of its business relates to maintenance of and training on the SCBA devices it sells.

For many years Scott Technologies carried on business under the name Scott Aviation Corp. and Scott Health and Safety. However, in the early 2000's Scott Technologies was purchased by Tyco International who decided to brand the fire and security division of Scott Technologies as Scott Safety.

In February 2011, Scott Technologies applied for the following trademark, on a proposed use basis:

Scott Technologies also owned trademark registrations for the word SCOTT and for a stylized version of the word SCOTT in association with a lengthy list of wares, which presumably related to its SCBA devices.

This application was opposed by the defendant and was unresolved at the time of the trial.

The Defendant

The defendant's predecessor started a business relating to filling and repairing fire extinguishers in 1995. The business name Scott Safety Supply and Services was registered in May 1995 in Alberta. A related company expanded into British Columbia and was subsequently incorporated.

Over the years the defendant abbreviated the tradename to Scott Safety in association with various design presentations which featured these words.

In September 2011, the plaintiff demanded that the defendant discontinue all use of the trademark and tradename Scott by itself or as a part of a trademark or tradename. The parties agreed to disagree and an action was brought for the plaintiff in the Federal Court.

The Evidence

During the course of the trial it became apparent that the defendant had used the phrase Scott Safety as early as 1995 but the plaintiff had carried on business as Scott Health & Safety beginning in approximately 2000 and that it did not use the trademark/tradename Scott Safety until 2011.

The judge concluded that the users of SCBA equipment operate in environments that are dangerous and they have some level of sophistication and an understanding of their environment.

The defendant could not take the position that the reference to Scott in its business names was a family name. The defendant's founder adopted the name "Scott" for the new business because it was his girlfriend's family name and her father had carried on business under the name Scott Wireline serving oil and gas customers, was about to retire and had a very good business reputation. The founder's surname on the other hand was associated with a previous fire extinguisher company that did not have a good business reputation.

At the time the defendant's business was first established in relation to servicing fire extinguishers many customers asked if the defendant could service Scott Technologies' SCBA devices. As the business was just starting and necessary arrangements were made to provide such service using a third party. During the period of 2000-2003 the defendant operated an in-house repair centre for the plaintiff's SCBA equipment.

Passing-Off

The plaintiff alleged that the defendant had engaged in passing-off contrary to subsection 7(b) of the Trademarks Act. In order to succeed, the plaintiff must prove:

(a) there is goodwill associated with the trademark owned by the plaintiff;

(b) the defendant had made a negligent or deliberate misrepresentation that causes or is likely to cause confusion between the respective goods and services;

(c) the defendant's misrepresentation has caused or is likely to cause damage to the plaintiff.

Concurrently, the plaintiff was also alleging infringement of the registered trademark SCOTT. In order to succeed with a claim for infringement the plaintiff must prove that the defendant sold, distributed or advertised wares or services in association with the confusing trademark or tradename and that the defendant was not entitled under the Act to the use of the registered trademark.

The judge said that the concept of confusion applied to both causes of action. Confusion results if the defendant has led the public to believe that its goods, services or business is that of the plaintiff or is approved, authorized or endorsed by the plaintiff or that there is some business connection between them. The test for confusion is one of first impression and imperfect recollection by the relevant consuming public.

The Act sets out a non-exhaustive list of criteria that the court should consider when determining whether confusion has occurred. The court must have regard to all of the surrounding circumstances including:

(a) the inherent distinctiveness of the trademarks or tradenames and the extent to which they have become known;

(b) the length of time the trademarks or tradenames have been in use;

(c) the nature of the goods, services or business;

(d) the nature of the trade; and

(e) the degree of resemblance between the trademarks or tradenames in appearance or sound or in the ideas suggested by them.

The judge thought that factor (a) slightly favoured the defendant but that factor (e) slightly favoured the plaintiff and the remaining factors did not ambiguously favour either party. In this situation, the judge felt that the most important contextual factor was the lack of evidence of actual confusion.

After reviewing the evidence in a detailed fashion the trial judge found that there was no real evidence of confusion despite the fact that the defendant's business had operated in a market in which the plaintiff had been doing business for more than 20 years. As a result, the judge concluded that the plaintiff had not made out a claim for passing-off or infringement of its trademark.

The judge also said that, even if he had decided the case in favour of the plaintiff, he would have refused to award any damages or provide the plaintiff with any injunctive relief. The grant of an injunction is equitable and discretionary. In this case the plaintiff had long known of the defendant's use of the tradename Scott Safety but did nothing until it was decided that it wished to globally rebrand itself as Scott Safety. A business cannot lie in the weeds, allowing another to carry on and invest in and grow its business and then spring up and enlist the aid of the court alleging that it has been treated unfairly. In this case if there was any unfairness it was that the defendant had been unfairly treated by the plaintiff when it decided to use the same name the defendant had been using in excess of 20 years.

Comment

In passing-off cases there is no formal mechanism to determine entitlement as there is under the Trademarks Act. However, it is well established that if a defendant has been using a trademark or trade name that is the same or similar to the plaintiff's mark or name with equal claim to its independent use, it will be very difficult for the plaintiff to succeed unless it can show that the defendant has extended its use to the plaintiff's area of business or beyond the area where the defendant carried on business.

In addition, in trademark cases concurrent use for a lengthy period of time without any instances of confusion is frequently consistent with a finding that conclusion is unlikely.

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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John McKeown
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