Canada: Trademarks Owners Be Warned — Certain Services May Require Bricks-And-Mortar Location In Canada

The cautionary lesson emerging from a rash of Trademark Opposition Board decisions over the past several years is that owners of registrations for services, such as hotel services, without bricks-and-mortar establishments in Canada should ensure that their registrations also cover "reservation services", or other services that are rendered in Canada. Otherwise, such registrations may be at risk of expungement through summary non-use cancellation proceedings pursuant to Section 45 of the Trade-marks Act (the "Act"). That section permits any person to request the Registrar to send a notice to the owner of a registration more than three years old, requiring proof of use in Canada or extraordinary reasons to excuse non-use, failing which the registration will be expunged.

The recent decision in Stikeman Elliott LLP v Millennium & Copthorne International Limited, 2017 TMOB 34, demonstrates challenges facing trademark owners in the e-commerce context when it comes to "hotel services". This case involved a summary non-use cancellation proceeding against registrations for the trademarks STUDIO M HOTEL and STUDIO M HOTEL & Design, both for "hotel services and reservation services in relation to hotels". The hotel itself was located in Singapore, but reservations could be made by customers in Canada through the hotel's website, and the hotel offered event planning services to Canadians arranging events at the hotel. Hearing Officer Bene concluded that the website's reservation platform, which the evidence showed was accessed by customers in Canada during the relevant period, constituted "use" sufficient to maintain the registration for the reservation services, but that without a physical "bricks-and-mortar" hotel in Canada, "hotel services" would be expunged, notwithstanding any "ancillary" services available to customers in Canada, like event planning.

The decision turned on whether the "hotel services" were available to be performed in Canada. Section 4(2) of the Act deems a mark to be "used" in association with services if "used or displayed in the performance or advertising of those services", but the jurisprudence is clear that mere advertising in Canada is not sufficient. What constitutes a "service" is not defined in the Act. Past court decisions have held that where the performance of the advertised services could only be completed by travel abroad, there is no use "in" Canada (see Marineland Inc v Marine Wonderland and Animal Park Ltd (1974), 16 CPR (2d) 97 (FCTD)). Other decisions, however, had suggested that performance of related or ancillary services could constitute "use" with the main services. In particular, in Venice Simplon-Orient-Express Inc v Société Nationale des Chemins de Fer Français SNCF (2000), 9 CPR (4th) 443 (FCTD), the Federal Court held that the ability of customers in Canada to reserve, book, or pay for train services in Canada could support "use" of the mark in respect of "travel services, namely passenger rail services", even though the physical train (and the trips booked) were in Europe.

Since then, a line of cases including Bellagio Limousines v Mirage Resorts Inc, 2012 TMOB 220—the first of the "recent" hotel services cases— Stikeman Elliott LLP v Millennium & Copthorne International Limited, 2015 TMOB 231,  Miller Thomson LLP v Hilton Worldwide Holding LLP, 2017 TMOB 19 (under appeal), and most recently the 2017 Millennium & Copthorne decision, have all rejected that the performance of ancillary or other related services in Canada constitutes the "performance" of "hotel services" in Canada, and that without a  reference in the statement of services to an ancillary service, such as reservation services, that is performed in Canada, the registration will be at risk of expungement. In Bellagio, and as followed by the subsequent cases, the reason for this rejection focused on whether the customer could enjoy the experience of the specific registered services in Canada:

Unlike retail store services, where the Registrar and courts have recognized that technology has progressed to the point where one can enjoy the retail experience without ever having to leave one's home, there is no evidence before me that hotel services have made such progress. To put it more simply, in my view, a "bricks-and-mortar" presence in Canada is required for such hotel services. A hotel cannot be operated via the Internet or a 1-800 telephone number; it is contrary to common sense to equate the ability to make hotel reservations with the operation of a hotel. Indeed, I note the decision in Motel 6 v No 6 Motel Ltd (1981), 56 CPR (2d) 44 (FCTD) which explicitly states that "...receiving and confirming reservations for motel accommodation in the U.S.A. does not constitute use of the mark in Canada in association with motel services" [at paragraph 17]

Similar to "hotel services", the Federal Court in Supershuttle International, Inc. v. Fetherstonhaugh & Co., 2015 FC 1259, upheld a decision of the Opposition Board to expunge a trademark registration covering "airport passenger ground transportation services", where the evidence showed customers in Canada could, and that thousands did, reserve seats in the registered owner's airport shuttle vans, but where the registered owner did not operate any such vans in Canada. The Opposition Board noted the decision in Motel 6 in holding that the ability to make reservations in Canada does not establish use of the mark in Canada with the registered services, and limited the holding in Orient Express to the particular facts of that case. On appeal, the Court agreed that what constitutes use in relation to a service must be determined on a case-by-case basis. The Court concluded that, while the observation of a trademark by individuals on computers in Canada may demonstrate use of a mark, the Registrar's decision was reasonable since the registered services must still be offered in Canada, and they were not.

Assuming this trend continues, unless a registrant performs its services through a bricks-and-mortar establishment located in Canada, mere advertising or performance of tangentially related services, such as reservation or event planning services, may be insufficient to maintain a registration unless it specifically covers such ancillary services. Even without the core services, such as hotel services, a registration for "reservations services" may, particularly if combined with use of the core services elsewhere and related publicity or advertising in Canada, be very helpful in dealing with unauthorized uses and confusing applications.

It is recommended that owners of service mark registrations without a physical presence in Canada review the listed services, and consider adding, if necessary, a specific reference to any ancillary services offered in Canada, such as reservation services, to avoid cancellation proceedings.

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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