Canada: Court Of Appeal Serves Stiffer Shot In Trade-Mark Expungement Applications

In a recent decision, the Federal Court of Appeal set some ground rules for relief that can be ordered in trade-mark expungement applications. The court also considered whether ancillary relief can be ordered when not expressly requested in the Notice of Application. In addition, it cautioned against issuing sweeping orders where the respondent has no notice of the relief being requested.

Spirits International B.V. was the owner of various STOLICHNAYA trade-marks for alcohol. It sought to expunge the STALINSKAYA trade-mark registration of S.C. Prodal 94 SRL. Under the Trade-marks Act, the court can order that an entry in the register be struck out or amended on the ground that at the date of the application, the entry on the register does not accurately express the existing rights of the registered owner.

Prior to the expungement proceeding, Prodal voluntarily cancelled its existing STALINSKAYA mark and applied for a fresh STALINSKAYA trade-mark for alcohol. Having cancelled the trade-mark at issue in the expungement proceeding, Prodal did not file a Notice of Appearance and did not participate in the hearing.

In its memorandum of law to the court, Spirits requested a stay of proceedings and an injunction prohibiting the registrar from considering the other pending trade-mark application for STALINSKAYA (forms of relief not requested in its Notice of Application).

First Call: The Trial Court Giveth

At the hearing, the application judge declared that Prodal's trade-mark STALINSKAYA was not distinctive because it was confusing with the Spirits' registered STOLICHNAYA trade-marks. With respect to Prodal's new, pending application for STALINSKAYA, the court granted the stay and injunction requested in Spirits' memorandum of law.

Last Call: The Appeal Court Taketh Away

Court could not grant relief that was not requested

On appeal, the Court of Appeal overturned the lower court by first declaring that "[t]hat which does not exist cannot be expunged."

Furthermore, the court noted that Spirits' Notice of Application did not include a request for a stay or an injunction, nor was that relief ancillary to the relief requested in the Notice of Application. Consequently, the judge had no authority to grant that relief.

The court also found that Spirits' "basket clause" request in its Notice of Application for "such other relief as counsel may advise and this Honourable Court deems just" was insufficient to encompass the relief requested in Spirits' memorandum. There was no support that the basket clause should be extended to the granting of stays, mandatory injunctions or orders of prohibition, the court found.

The Court of Appeal pointed to other errors of law in the lower court's decision: in order to obtain a stay, Spirits needed to satisfy the tripartite test established by the jurisprudence, but the test was not even addressed, much less satisfied. Also, a mandatory injunction requires one to act positively and thus a mandatory injunction and a stay could not co-exist, contrary to the application judge's order.

Failure to file Notice of Appearance not fatal

By way of a separate preliminary motion, Spirits sought to quash Prodal's appeal on the basis that Prodal had failed to file a Notice of Appearance on the application. However, the Court of Appeal was not persuaded that Prodal had acquiesced to the granting of relief in circumstances where it did not have notice of the relief being requested.

Moreover, as a result of having failed to file a Notice of Appearance, Prodal was unaware of the relief Spirits requested in its factum. The Court of Appeal cautioned that, in circumstances where a respondent party does not have notice of the relief being requested, such relief should not be granted until notice is given and the respondent is offered the opportunity to respond.

McCarthy Tétrault Notes:

The case highlights the importance of seeking the appropriate relief in the Notice of Application, instead of relying on a catch-all basket clause to encompass any and all relief.

The decision also has implications for cases in which the respondent does not signal an intention to oppose the application. In such a case, the applicant may well be advised to provide the named respondent with notice of precisely what is being sought and what is being argued (e.g., by serving the respondent with all court filings).

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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