Canada: Federal Court Of Appeal Overturns Case Law On Special Circumstances Excusing Non-Use In Summary Cancellation Proceedings

On April 4, 2008, the Federal Court of Appeal (FCA) released its decision in Scott Paper Ltd. v. Canada (Attorney General). The decision clarifies the law in summary cancellation proceedings initiated under section 45 of the Trade-marks Act, and is of special interest because the FCA took the unusual step of overruling a decision of another panel of the FCA.

The appeal arose from summary cancellation proceedings initiated by Smart & Biggar. Summary cancellation proceedings enable the Registrar of Trade-marks to issue a notice requesting that the registered owner of a trade-mark furnish the Registrar with evidence (by way of affidavit or statutory declaration) showing use of the trade-mark in Canada at any time during the three-year period immediately preceding the date of the notice. If the trade-mark is not in use (and if there are no special circumstances justifying non-use), the trade-mark will be expunged.

The Registrar forwarded notice under s. 45 of the Trade-marks Act to Scott Paper, requiring it to provide evidence of use of the registered trade-mark VANITY in Canada within the preceding three years.

The evidence filed by Scott Paper did not show use within the last three years. In fact, it established that there had been no use in the last thirteen years, but did not provide any reason for the absence of use during this time. Instead, Scott Paper relied on evidence that it had planned to recommence using the mark before it had received the notice from the Registrar, and that since the date of such notice, use had in fact begun.

Despite finding that: (i) there had been deliberate non-use for thirteen years and (ii) no reasons for the non-use were provided, the Registrar did not order the expungement of the registration. The Senior Hearing Officer decided to maintain the registration for the trade-mark VANITY, despite the fact that there was no evidence of use of the mark in thirteen years, because Scott had shown that it had resumed use of the mark. The Senior Hearing Officer held that this intention to resume use qualified as special circumstances excusing non-use.

Smart & Biggar appealed to the Federal Court, which reversed the decision of the Senior Hearing Officer, and ordered the trade-mark expunged. Scott Paper then appealed to the FCA. The FCA upheld the decision of the Federal Court, holding that deliberate non-use of a trade-mark cannot be justified by reason of a registrant's intention to use it in the near future.

In upholding the Federal Court decision, the FCA clarified the law on special circumstances that may excuse non-use of a registered trade-mark under s. 45(3) of the Trade-marks Act. The FCA noted that jurisprudence had evolved in the direction of treating plans for resumption of use as a special circumstance excusing non-use. However, the Court went back to the seminal case on this issue, carefully reviewed the reasoning, and extracted four core principles: (1) the general rule is that absence of use is penalized by expungement; (2) there is an exception to the general rule where the absence of use is due to special circumstances; (3) special circumstances are circumstances not found in most cases of absence of use of the mark; and (4) the special circumstances which excuse the absence of use of the mark must be the circumstances to which the absence of use is due.

According to the FCA, the fourth factor was dispositive of the appeal. As special circumstances may only excuse non-use where they refer to the actual reason for non-use, it follows that the intention to resume use cannot constitute special circumstances, as it is irrelevant to the reasons for the prior non-use.

The FCA noted that the Senior Hearing Officer had relied on jurisprudence that held that an intention to resume use could qualify as special circumstances excusing non-use. However, the FCA expressly overturned such jurisprudence, arguing that it was irreconcilable with both the words of the Trade-marks Act and the seminal case of Harris Knitting Mills.

The FCA also agreed with the summary of the trial judge who posed the following question while allowing the appeal from the Registrar's decision: "Would one excuse a truant schoolboy for an absence of a month because, when confronted, he demonstrated that although he had no explanation for his past absences he genuinely intended to go to school the next week?"

Both the Federal Court and the FCA clearly felt that the answer to such a query was "no."

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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