Canada: Damages After Expungement

Last Updated: October 4 2019
Article by John McKeown

In November of 2017 we discussed a decision of the Federal Court of Appeal concerning a claim for trademark infringement. The Court referred two issues to the trial Judge. The trial Judge's decision has now been released.

The Facts

Wenger S.A. ("Wenger") is a Swiss company. In the early seventies, Wenger adopted a trademark consisting of a cross in a rounded quadrilateral surrounded by an inlay border. Typically, the cross is presented in white against a red or black background. The design is reproduced below.

(the "Wenger Cross mark")

Wenger uses the Wenger Cross mark and related variants throughout Canada in association with luggage and bags and owns trademark registrations for its marks.

Travelway Group International Inc. ("Travelway") was founded in the late 1970s. It mainly manufactures and distributes luggage and travel-related products under its own trademarks or as a licensee for others.

Travelway was involved in a strategic alliance with an unrelated Swiss company and agreed to assist in designing products for its Swiss travel products brand. Travelway developed two new logos for which it obtained registrations in the form set out below for use with luggage and related products:

the ("Travelway cross mark") and the ("Travelway triangle mark").

The Dispute

Wenger alleged that in February of 2012 Travelway modified the logos appearing on its luggage and bags. The prominent "S" feature was altered making the "S" difficult to see. The modified logos are reproduced below:

the ("Modified Logos").

Wenger brought an application in the Federal Court seeking a declaration that Travelway had infringed the Wenger Cross Logo and variants and related relief and an order expunging the two registrations owned by Travelway.

The Appeal

The trial Judge dismissed the claim, but the Federal Court of Appeal did not agree and allowed the application. The Court said that in considering whether the Modified Logos used by Travelway were separate trademarks, the applicable legal principle was that a variant is part of the registered mark if it retains the dominant features of the registered mark. In this case, Travelway made a series of changes to the Travelway triangle mark, some more subtle than others, and all of which more closely resemble the Wenger cross mark. However, none of the changes either separately or together take away the dominant features of the Travelway triangle mark which is a cross on a background with a contrasting border. Omitting the "S" was not a dominant element of the marks.

Second, the Court found that the trial judge's confusion analysis was flawed on several grounds and it was not appropriate to carry out a separate analysis concerning the Modified Logos. The analysis should consider the Travelway triangle mark, as registered, and the Modified Logos.

In the interest of judicial economy, the Federal Court of Appeal carried out a confusion analysis. The Court started by observing there was a very strong resemblance between the Travelway triangle mark and the Wenger cross mark. This was demonstrated by evidence consisting of physical examples of luggage that display the Wenger cross mark and the Modified Logos. It was very difficult to discern a difference in these marks unless one scrutinized them closely, which is not the applicable test. All of the surrounding statutory factors were in favour of a finding of confusion.

Further, there was no evidence that third parties were using similar logos in association with luggage. While third party use could reduce the weight of the acquired distinctiveness factor this did not completely erode the acquired distinctiveness of the Wenger cross mark that it has gained through years of strong sales.

Finally, the Court carried out a separate confusion analysis concerning the Travelway cross mark and found it too was confusing with the Wenger Cross mark.

Because of its conclusions, the Court allowed the appeal and granted Wenger the relief it had initially sought including an injunction and delivery up. The claim for expungement and Wenger's claim for damages or an accounting of profits was referred to the trial Judge to be decided since there had not been sufficient time to deal with it in the time allotted for the hearing of the appeal.

The Reference

The judge found that the Federal Court of Appeal had implicitly considered the Travelway marks to be invalid. As a result, the two registrations were expunged.

Wenger's claim for damages or an accounting of profits was more contentious. Both parties agreed that Travelway ceased all use of the impugned marks when the decision of the Federal Court of Appeal was released. Before the release of the decision Travelway was entitled to the benefit of section 19 of the Act, which states that the registration of a trademark, unless shown to be invalid, gives to the owner the exclusive right to the use throughout Canada of the trademark in respect to the goods and services it is registered for use in association with.

If the registration was obtained because of a materially false statement of use fundamental to the registration or based on a fraudulent misrepresentation, the registration may be void ab initio and expunged on this basis. However, none of these grounds were present and Travelway was entitled to the benefit of section 19 of the Act. As a result, no damages or an accounting of profits were awarded to Wenger.

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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