Canada: Court Clarifies Law On Trademarks And Geographic Place Names In Canada

Last Updated: January 27 2017
Article by Susan Keri

The decision of the Federal Court of Appeal in Canada in MC Imports Inc. v. Afod Ltd., 2016 FCA 60, provides some much needed guidance for both trademark practitioners and trademark owners on the proper test for assessing the registrability of trademarks that describe the place of origin of the goods or services with which they are associated. Handed down in February 2016, guidance was needed because of the conflicting approaches in prior jurisprudence regarding the appropriate test for assessing the registrability of trademarks that are also geographic places. In MC Imports, the Court of Appeal confirmed that if a mark contains the name of a geographic location from where the goods or services emanate, then the mark is clearly descriptive of the place of origin and not registrable. In addition, the Court of Appeal clarified that the perception of the consumer is irrelevant for purposes of a geographically descriptive analysis, but is relevant for the purposes of a geographically deceptively misdescriptive analysis.

The Law on Descriptive Marks

Section 12(1)(b) of the Trade-marks Act precludes registration of trademarks that are either clearly descriptive or deceptively misdescriptive of the character or quality of the goods or services with which they are associated, or their place of origin. Recent Canadian jurisprudence has, however, struggled with the appropriate legal test to apply in cases dealing with trademarks that are geographic place names.

How the Courts Have Struggled

In Conzorsio Del Proscuitto Di Parma v. Maple Leaf Meats Inc., 2001 2 FC 536, the Federal Court—Trial Division held that although Parma was a city in Italy where people manufacture meat products, the trademark PARMA for meat products was not deceptively misdescriptive of the place of origin of the goods, even though the products did not come from Parma, since the ordinary Canadian consumer did not recognize the word "Parma" as having any geographic significance. As such, they would not be misled into believing that meat products bearing the trademark PARMA would have originated from the city of Parma. In addition to a mark having geographic name significance, the court in Parma held that the perception of the ordinary consumer was a necessary component of the Section 12(1)(b) analysis. The decision was upheld in 2002 by the Federal Court of Appeal, 2002 FCA 169.

By contrast, in the 2007 decision in Sociedad Agricola Santa Teresa Ltd. v. Vina Leyda Limitada, 2007 FC 1301, the Federal Court—Trial Division held that if a mark contains the name of the geographic place from where the goods or services originated, then the ordinary consumer's recognition or perception of the place name was irrelevant when assessing clear descriptiveness of the place of origin. In this case, since Leyda was a wine producing region in Chile, it was necessary to conclude that the trademark LEYDA for wines was not registrable, being clearly descriptive of the place of origin of the products, contrary to Section 12(1)(b).

In Leyda, the Federal Court also distinguished earlier jurisprudence regarding the relevance of consumer perception, noting that it was only applicable to the test for assessing clear descriptiveness of the "character or quality" of the goods or services, and not for an assessment of clear descriptiveness of their "place of origin."

The Ocean Park Dispute

More recently, in Dr. Patrick Lum and Dr. P.K. Lum (2009) Inc. v. Dr. Coby Cragg Inc., 2014 FC 1171, 2015 FCA 293, the Federal Court—Trial Division considered the validity of a trademark registration for OCEAN PARK covering dentistry services offered in a neighborhood in Canada called Ocean Park. The plaintiffs argued that the OCEAN PARK registration should be invalidated since it was not registrable at the date of its registration, being clearly descriptive of the place of origin of the dental services, contrary to Section 12(1)(b) of the Trade-marks Act.

The trial court held that while the trademark OCEAN PARK was the geographic place name in which the dental services originated, that place name was not "indigenous to" (or known by consumers for) these services and, therefore, the mark could not be clearly descriptive of the place of origin of the associated services within the meaning of Section 12(1)(b).

On appeal, the Federal Court of Appeal overturned the lower court's decision, finding that the trademark OCEAN PARK was, in fact, clearly descriptive of the place of origin of the dental services. In so far as the services were provided in a neighborhood in British Columbia called Ocean Park, the Court found that the OCEAN PARK trademark prima facie described the geographic location in which the services were provided. As such, the mark was contrary to Section 12(1)(b) of the Trade-marks Act, being clearly descriptive of the place of origin of the services, and the registration was invalidated.

The LINGAYEN Trademark

In the most recent consideration of this issue, the Federal Court of Appeal in MC Imports Inc. v. Afod Ltd, 2016 FCA 60, also found that if a trademark is the name of a geographic place, and if the goods or services originate from that place, then the mark is clearly descriptive of the place of origin and not registrable. Consumer awareness is not relevant.

MC Imports was the registered owner in Canada of the LINGAYEN trademark covering Filipino food products, including fish sauce and paste. Afod Ltd. imported food products from the Philippines with labels featuring the words "Lingayen Style," and subsequently sold them to grocery stores in Canada. MC Imports began a trademark infringement action to prevent this importation and use, and Afod counterclaimed to expunge the LINGAYEN registration on the basis that it was clearly descriptive of the place of origin of the products and not registrable.

The Federal Court—Trial Division reviewed the two approaches to assessing the issue of clear descriptiveness and place of origin and held that, in this case, it was not necessary to determine which approach was doctrinally correct because, under either formulation, the mark was invalid. Since Lingayen was a geographic location in the Philippines, and since the goods in question originated from Lingayen, the LINGAYEN mark was clearly descriptive of the place of origin of the goods and invalid. The court also found that since the goods originated from Lingayen and since Lingayen, as a region, had a generally recognized connection to fish products from the perspective of the average Canadian consumer of the goods, the mark was clearly descriptive of the place of origin and not registrable. The court therefore dismissed the action for infringement and ordered the LINGAYEN registration to be expunged.

On appeal, the Federal Court of Appeal upheld the decision of the trial judge, but went on to clarify the appropriate legal test for determining the registrability of trademarks that describe places of origin of goods and services, noting that there was a need for guidance in this area.

In an attempt to reconcile the apparent doctrinal divide between the Parma and Leyda decisions, the Court acknowledged that there was a distinction between cases dealing with clear descriptiveness of the place of origin and those assessing the issue of deceptive misdescriptiveness of the place of origin, and that only the latter type required an assessment of consumer perception. Hence, the Parma case, relying on consumer awareness as a component of the analysis, would not be the proper jurisprudential authority in a case dealing with the issue of clear descriptiveness of the place of origin.

Parma dealt with the issue of whether a mark is deceptively misdescriptive of the place of origin. In these cases, even if the mark is the name of a geographic place, it may not be deceptively misdescriptive of the place of origin if the ordinary Canadian consumer would not assume that the goods or services came from that place. By contrast, in a case involving trademarks that are clearly descriptive of the place of origin, the perspective of the ordinary consumer would be unnecessary. If a mark is the name of a geographic place, and the goods or services emanate from there, then, as a matter of law, the mark would be clearly descriptive of the place of origin and not registrable.

The decision in MC Imports supports the trend in more recent Canadian jurisprudence, taking the position that the test for determining geographic descriptiveness under Section 12(1)(b) of the Trade-marks Act is different from the test applied to assess other kinds of descriptiveness. Some would argue, however, that there is no statutory basis for this distinction. The word "clearly" modifies the word "descriptive" in the same way as the word "deceptive" modifies the word "misdescriptive" in Section 12(1)(b), which suggests that consumer perception ought to be considered in the analysis of both. It remains to be seen whether Canadian jurisprudence will continue this trend.

The Canadian IP Office Responds

On November 9, 2016, the Canadian Trademarks Office issued a Practice Notice to clarify its position with respect to trademarks that are geographic names. The Notice is intended to bring the Office's practice in line with the MC Imports decision, and states that a trademark will be deemed clearly descriptive of the place of origin of the associated goods or services, and thus not registrable under Section 12(1)(b) of the Trade-marks Act, if the trademark, whether depicted, written, or sounded, is a geographic name and the associated goods or services originate from the location of the geographic name. Notably, this test does not include a consideration of the perception of consumers.

The Practice Notice also states that a trademark will be deemed misdescriptive if it is a geographic name and the associated goods or services do not originate from the location of the geographic name. To assess whether the trademark is deceptively misdescriptive, and thus not registrable under Section12(1)(b) of the Act, the perception of the ordinary consumer—namely, whether he or she would be misled into the belief that the associated goods or services originated from the location of the geographic name in the mark—will, in this case, be relevant.

The Office will consider a trademark to be a geographic name if it has no meaning other than as a geographic name or, if it has multiple meanings, then its primary or predominant meaning is as a geographic name. This determination will also be assessed from the perspective of the ordinary Canadian consumer of the associated goods or services. The Office will then ascertain the actual place of origin of the associated goods or services by seeking confirmation from the applicant.

Notably, the tests for clear descriptiveness and deceptive misdescriptiveness both depend on a finding that a trademark "is a geographic name." Though not indicated in the Practice Notice, the Canadian Trademarks Office Examination Manual confirms that a "geographic name" can be interpreted to mean a street name, a neighborhood, a city, region, state, province, country, or continent. Also not clear from the Practice Notice but clarified in the Examination Manual is that examiners will consider goods or services to originate from a geographic place if they are manufactured, produced, grown, assembled, designed, provided, or sold there, or if the main component or ingredient is made in that geographic location.

The decision of the Federal Court of Appeal in MC Imports, combined with the recent Trademarks Office Practice Notice, indicates that examiners and the courts in Canada are very likely to refuse applications, or invalidate registrations, for trademarks that are geographic place names from where the associated goods or services originated, barring evidence showing acquired distinctiveness. The Practice Notice does not affect the statutory exception to the Section12(1)(b) bar to registrability if the applicant can show that the mark has been so used in Canada as to have acquired distinctiveness as of the filing date of the application.

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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