In MC Imports Inc v AFOD Ltd, 2016 FCA 60, the Federal Court of Appeal revisited the issue of whether geographically descriptive words are registrable as trademarks or whether they are prohibited by section 12(1)(b) of the Canadian Trademarks Act. The decision, coming less than three months after the decision of the Federal Court of Appeal in similar factual circumstances in Lum v Dr Coby Cragg Inc, 2015 FCA 293, represents an attempt by the Federal Court of Appeal to provide guidance with respect to the registrability of trademarks that describe places of origin of their goods or services.
Lingayen is a municipality of about 100,000 people in the Philippines known for its shrimp paste products. The appellant MC Imports Inc. obtained a registration for the trademark LINGAYEN in association with Filipino food products including fish sauce and fish paste. The respondent AFOD Ltd. imported food products from the Philippines and other Asian countries under its trademark "Napakasarap". The labels of some of the products imported by AFOD also included the words "Lingayen Style". MC Imports brought an action against AFOD in the Federal Court for infringement of its LINGAYEN trademark registration and for passing-off.
Justice Rennie of the Federal Court found that the goods in question originated from Lingayen, and that Lingayen, as a region, had a "generally recognized connection to fish sauce products from the perspective of the average Canadian consumer of the [goods] in question", and that the trademark was therefore clearly descriptive. In so finding, Justice Rennie declined to resolve controversy between the parties on the question of whether the proper test is to consider whether the ordinary consumer would recognize the trademark as relating to the place of origin, or whether the perspective of the ordinary consumer is irrelevant and the question is whether the trademark actually describes the place of origin of the goods or services.
In the result, Justice Rennie dismissed MC Imports' action for infringement and expunged its registration. MC Imports appealed to the Federal Court of Appeal.
Federal Court of Appeal
On appeal, the Federal Court of Appeal recognized the need for guidance in the area of trademarks alleged to be clearly descriptive of the origin of the relevant goods or services. Justice Trudel, writing for the Court, found that unlike the test for whether a trademark is clearly descriptive or deceptively misdescriptive of the character or quality of the associated goods or services, the test is less clear in the context of a trademark alleged to be clearly descriptive of a place of origin.
The Court then elucidated a three-stage test for whether a geographic name is clearly descriptive of a place of origin, which may be summarized as follows:
(1) Determine whether the trademark is or contains a geographical name;
(2) Determine whether the relevant goods or services originate from that geographical area; and
(3) If so, the trademark may nevertheless be registrable if the trademark has been sufficiently used in Canada to be distinctive of the owner.
At the first stage, the Court clarified that where a trademark is both the name of a geographic place and has another meaning, the question is whether the geographic meaning is the primary or predominant one. This question should be considered from the perspective of the ordinary consumer, being the consumer of the particular types of goods or services in association with which the trademark is used.
In the Court's view, apart from that limited inquiry (i.e., into whether a trademark having multiple meanings would be primarily understood to refer to a geographic location), the perspective of the consumer of the goods or services is otherwise irrelevant to the first and second stages of the analysis. In so holding, the Court outlined a distinction between the test applicable to trademarks alleged to be clearly descriptive of origin and the test applicable to trademarks alleged to be deceptively misdescriptive of origin, in that consumer perception is only relevant in deceptively misdescriptive type cases.
Applying that test to the facts, the Court found that the goods associated with MC Imports' registration originated from the municipality of Lingayen. No evidence was led to establish that the word "Lingayen" referred to anything but the municipality. Accordingly, the trademark was held to clearly describe the origin of the goods. The Court found that MC Imports' evidence of use was insufficient to trigger the "acquired distinctiveness" provisions of the Trademarks Act. The appeal was dismissed and the LINGAYEN trademark expunged.
This decision provides explicit guidance on the subject of trademarks alleged to be clearly descriptive of the origin of the associated goods or services.
In addition, the decision highlights the different role of consumers' perceptions in assessing clearly descriptive trademarks versus deceptive misdescriptive trademarks. For clearly descriptive trademarks, consumers' perceptions are largely irrelevant, which is consistent with the more objective purpose of protecting traders' rights to use words common to the trade. With respect to deceptively misdescriptive trademarks, consumers' perceptions remain a relevant inquiry, which is consistent with the more subjective purpose of protecting consumers from being misled.
For further information regarding this topic, please contact a member of our firm's Trademarks group.
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