Canada: The Importance Of The Evidence In A Trademark Opposition!

A recent decision of the Federal Court of Appeal emphasizes the importance of the evidence required to succeed in a trademark opposition. Puma SE v. Caterpillar Inc. 2023 FCA 4.

The Facts

Puma SE filed a trademark application for the trademark PROCAT based on the proposed use of the trademark in Canada in association with "footwear, namely athletic, sports and casual shoes and boots; headgear, namely hats and caps."

Caterpillar Inc. filed a Statement of Opposition asserting, among other things, that the PROCAT mark was confusing with its registered trademark CAT & Triangle Design, shown below, which was registered for use in association with footwear and headgear.

Both parties filed evidence, and the opposition proceeded to a hearing. Caterpillar relied on the use of its mark in Canada by its licensees under section 50 of the Trademarks Act. The Hearing Officer determined that Caterpillar did not have the requisite control to benefit from this deeming provision. The licensing arrangements Caterpillar had with two of its licensees focused on packaging and labelling of the goods manufactured rather than the character or quality of the goods sold in association with Caterpillar's mark and showed a lack of direct control.

The Hearing Officer concluded there was no reasonable likelihood of confusion between Puma's trademark PROCAT and Caterpillar's mark.

The Appeal to the Federal Court

Caterpillar appealed to the Federal Court. As it was their right to do so, both parties filed additional evidence. In this situation, the Court must consider whether the new evidence was material in the sense of having a material effect on the decision of the Hearing Officer had it been presented at that stage.

The Court concluded the new evidence was material, which meant that the appeal was de novo. Here, the Court need not defer to the Hearing Officer's reasoning process and can undertake its own analysis to decide whether it agreed with the Hearing Officer's determinations or whether it should substitute its own views.

The Licence Issues

The Court found that the Hearing Officer had made palpable and overriding errors in assessing whether the licensed use of the CAT trademark in Canada by Caterpillar's licensees accrued to its benefit. The new affidavits filed on the appeal supported the conclusion that Caterpillar satisfied the requirements of both subsections 50(1) and 50(2) of the Act, and the licensees' use accrued to its benefit.

The Likelihood of Confusion

Subsection 6(2) of the Act provides that the use of a trademark causes confusion with another trademark if the use of both trademarks in the same area would likely lead to the inference that the goods associated with those trademarks are manufactured, sold, or leased, by the same person, whether or not the goods are of the same general class. The test to be applied was, as a matter of first impression, would a casual consumer, somewhat in a hurry, who saw a good bearing Puma's trademark PROCAT, when that consumer first encounters the trademark in the marketplace, and where the consumer has no more than an imperfect recollection of Caterpillar's trademark CAT & Triangle Design and does not give the matter any detailed consideration or scrutiny, be likely to be confused as to the source of the goods?

Subsection 6(5) of the Act specifies the following factors need to be considered in the confusion analysis in reviewing "all the surrounding circumstances":

These factors are not exhaustive and may be weighed differently in a context-specific assessment. However, in an opposition, the onus is on Puma to demonstrate no likelihood of confusion on a balance of probabilities.

It is a long-standing tenet of trademark law in Canada that the first element of the trademark often is the most important to distinguish one mark from another. However, more recent decisions consider whether an aspect of the trademark is striking or unique. This approach recognizes that trademarks with some differences still may result in likely confusion.

The Court agreed with the Hearing Officer's finding that the parties' trademarks resembled each other in appearance and sound because of the shared component CAT. But the Court disagreed regarding the extent to which the element "pro" assisted in differentiating Puma's mark from Caterpillar's trademark CAT & Triangle Design. There was evidence that the prefix "pro" has a suggestive or laudatory connotation in association with Puma's goods, which shifted the focus of the resemblance assessment to the more striking feature of the trademark, the suffix "cat." Both the PROCAT mark and CAT & Triangle Design suggested a feline animal.

In addition, the Supreme Court of Canada has said that considering a trademark as a whole does not mean that a dominant component in a mark which would affect the overall impression of an average consumer should be ignored. Applying this approach, the Court found there was significant resemblance between the parties' trademarks.

Another significant factor was the state of the register evidence. This consisted of evidence showing the existence of pre-existing trademarks containing similar elements. In theory, an element viewed as common in the marketplace may have little distinctiveness and cause consumers to pay greater attention to small differences or features between and among trademarks containing or comprised of that element.

Puma had filed evidence of 13 trademarks which the Hearing Office had accepted as enough on which to base an inference of marketplace use. The Court disagreed and said this number was insufficient to draw any inferences about the state of the marketplace, especially absent any demonstrated marketplace use of those marks.

When the Judge considered the statutory factors, including the new evidence of use filed by Caterpillar and the errors made by the Hearing Officer, she found that a likelihood of confusion between the parties' trademarks was established on a balance of probabilities. Specifically, that the following factors weighed in favour of Caterpillar: inherent distinctiveness and extent known; length of time in use; nature of goods; nature of trade; and the degree of the resemblance between the goods.

The Appeal to the Federal Court of Appeal

Puma appealed to the Federal Court of Appeal. Puma argued that the Judge erred in conducting her confusion analysis and her assessment of (i) the inherent distinctiveness of Puma and Caterpillar's marks and the extent to which they are known; (ii) that the degree of resemblance favoured Caterpillar; and the surrounding circumstances did not favour Puma. Each ground of appeal related to a question of mixed fact and law. The only standard engaged was that of palpable and overriding error.

The determination of whether a likelihood of source confusion exists is a fact-finding and inference-drawing exercise, and as a result appellate courts should generally defer to the trial Judge's fact findings and inferences. Absent a palpable and overriding error in a finding of fact or of mixed fact and law, the Court must decline to intervene.

Inherent Distinctiveness

The Court said Puma's contentions failed to reveal a palpable and overriding error concerning inherent distinctiveness. The Judge accepted dictionary definitions of "pro" that were not before the Board, finding it was a suggestive or laudatory prefix. It was not an error for the Judge to find that this element did little to make PROCAT distinctive. Suggestive or laudatory elements of trademarks rarely are considered to aid in making a mark distinctive.

Without evidence demonstrating that PROCAT had become known in Canada in relation to Puma, the Judge was left with Puma's bare assertion that consumers would associate the words "pro" and "cat" with Puma. Puma again failed to point to an error in the Judge's rejection of this assertion. Ultimately, the Judge's decision was predominantly based on the lack of evidence that PROCAT had ever been used in Canada to the extent that it had acquired distinctiveness or become known. The Board had reached a similar conclusion.

The onus was on Puma to show there was no likelihood of confusion. In relying on the factor of inherent distinctiveness and the extent that its mark was known, Puma had to show that PROCAT was distinctive and known to the extent that a casual consumer in a hurry, with an imperfect recollection, would associate that mark with Puma. The Judge found, based on the evidence, that Puma failed to do so. The Judge concluded that Caterpillar's mark possessed a "high degree of inherent distinctiveness" as a result, on this ground of appeal, the Court concluded that Puma failed to raise a palpable and overriding error.

The Degree of Resemblance

On reviewing this factor, the Judge first agreed with the Board that the parties' trademarks resembled each other and sounded alike because they share the component "cat". However, the Judge disagreed with the Board that the prefix "pro" in PROCAT assisted in differentiating it from Caterpillar's mark. The Judge referred to her inherent distinctiveness analysis and her finding there was evidence that "pro" had a suggestive or laudatory connotation and shifted the focus to the word "cat". She concluded there was significant resemblance between the two marks as the dominant feature of both marks was "cat".

It has been found that marks consisting of commonly used words are deserving of a smaller ambit of protection and some risk of confusion is acceptable to allow for fair competition. However, this generally requires evidence—deficient in the present case—that the word is so commonly used in the trade that a consumer will be sensitive to smaller differences in the mark.

It is not open to the Court to reweigh the evidence regarding the resemblance of the marks to render the outcome Puma preferred. This ground of appeal was also be rejected.

The Surrounding Circumstances - The State of The Register

As noted by the Judge, the number of similar marks needed to establish that an element of a mark is common in association with the relevant goods is a contextual inquiry that depends on the facts of the specific case. The Judge was entitled to give the existence of third-party marks less weight because no evidence of actual use in the relevant market was put forward. Such gaps in evidence are detrimental to Puma's burden of proof.

Subsection 6(5) of the Act addresses the likelihood of confusion, not the existence of actual confusion. While evidence of actual confusion may be persuasive, the lack of such evidence can be found to be irrelevant where—such as in the present case—there is no evidence that the registered third-party marks had been used contemporaneously with the opponent's mark. The burden was on Puma to demonstrate that the existence of third-party marks supported the inference it sought: that "cat" is a commonly used term in association with footwear and headgear.

Comment

Decisions relating to whether trademarks are confusing depend on the facts. Care must be taken to ensure that the "right" evidence is presented. The Federal Court of Appeal has made this clear in its decision.

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.