In Sociedad Agricola Santa Teresa Ltda. and Vicente Isquierdo Menendez v. Vina Leyda Limitada, the Federal Court considered the scope of paragraph 12(1)(b) of the Trade-marks Act (the Act). This paragraph provides that a trade-mark is not registrable if the mark is (when written or sounded) "either clearly descriptive or deceptively misdescriptive in the English or French language of the character or quality of the wares or services in association with which it is used or proposed to be used or of the conditions of or the persons employed in their production or of their place of origin."
Vina Leyda Limitada, a wine producer from the Leyda Valley region of Chile, had applied to register LEYDA as a trade-mark for use in association with wine. Vina Leyda's application was opposed by Sociedad Agricola Santa Teresa Ltda. and Vicente Isquierdo Menendez, each of which are wine producers from the same region in Chile.
In rejecting the opposition, the Trade-marks Opposition Board (TMOB) had held that although wine was produced in the Leyda Valley, the valley had not been designated by the Chilean government as an appellation of origin. Because the phrase "clearly descriptive" modified the meaning of the term "place of origin," the Registrar felt that there was insufficient evidence that the average Canadian would believe that LEYDA branded wine was from the Leyda Valley.
Sociedad Agricola Santa Teresa Ltda. and Vicente Isquierdo Menendez appealed the decision of the TMOB under section 56 of the Act, which allowed them to submit new evidence on the appeal. The new evidence showed that the term "Valle de Leyda" had been designated an appellation of origin in 2001 by the Chilean Ministry of Agriculture.
In overturning the TMOB's decision, the Court noted that because the word LEYDA clearly referred to the wine's place of origin, it was not registrable as a trade-mark. On a policy level, the Court noted that "geography is one of the most important considerations in assessing whether one should try a new wine." Allowing the respondent to register LEYDA, thereby preventing others in the region from referring to their wine's place of origin on labels or promotional literature, would give the respondent an unfair competitive advantage.
Although the Court did note that a trade-mark that describes a place of origin might be registrable if it had been used and/or become distinctive at least as early as the time at which the application for registration was filed, such a caveat could not help the application before it, as LEYDA had not been used in Canada before the application was filed, nor had it become distinctive.
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