No New Grounds of Opposition on Appeals from the Registrar of Trademarks

Sun World International Inc. v. Parmalat Dairy & Bakery Inc. concerned a procedural issue, namely a “novel application” to amend a Statement of Opposition to add section 22 of the Trademarks Act (depreciation of goodwill).

The respondent, Parmalat, had successfully opposed the applicant’s (Sun World’s) trademark BLACK DIAMOND for use in association with fresh fruit and vegetables, narrowed to plums. The Registrar of Trademarks concluded that use of the mark at the relevant date had not been established and that the applicant had not demonstrated there would be no reasonable likelihood of confusion. The applicant then appealed to the Federal Court pursuant to section 56 of the Trademarks Act.

Section 56(5) allows for the introduction of new evidence. On the appeal the applicant filed new evidence and the respondent in turn sought to amend the Statement of Opposition and file new evidence.

The Prothonotary hearing the matter concluded that section 56 of the Trademarks Act allowed fresh evidence on issues that were before the Registrar, but the de novo jurisdiction of the Court under section 56 was otherwise restrained. Thus, the Statement of Opposition could not be amended on appeal.

Establishing a Trademark’s Distinctiveness: Recent Case Law

In Cross-Canada Auto Body Supply (Windsor) Limited v. Hyundai Motor America, the Applicant (the reseller of automotive parts and accessories and the Defendant in an ongoing trademark action brought by the Respondent) sought to expunge five of the Respondent’s trademark registrations: HD Design, HD & HYUNDAI Design, HMC Design, HYUNDAI and SONATA. In 1985 the Respondent’s parent company had assigned three of the marks to the Respondent’s predecessor, which in turn assigned the marks to the Respondents, in 1996, but the assignment was only registered in August 2004. The other two marks were assigned to the Respondent in September 2004.

The Applicant argued that the marks were not distinctive of the Respondent, the relevant date for determining distinctiveness in this case being the date the expungement action was commenced, because the the consuming public was not advised during the 1985 -2004 period of the change in ownership.

The Court noted that distinctiveness is the cardinal requirement of a trademark and it is a question of fact whether a clear message has been given to the public that the wares associated with the mark are those of the trademark owner and not those of another party. Relying on survey evidence, the Court concluded that the purchasing public was not confused about the source of the wares and always understood the Respondent to be the source of the vehicles, even though they were sold through dealers.

Moreover, since 1985 the Respondent and its predecessor, although they had not officially registered the assignment, had built up goodwill through extensive advertising.

The Court distinguished the Respondent’s situation from the earlier cases (Wilkinson Sword (Canada) Ltd. v. Juda and Breck’s Sporting Goods Co. v. Magder ) where a transfer of marks by a foreign parent company to its Canadian subsidiary and sales in Canada by a third party of wares purchased from the parent company resulted in a loss of distinctiveness. In the earlier cases there was no evidence that the source of the goods had become identified with the Canadian subsidiary. In this case, however, the Court was convinced by the expert evidence that the consuming public identified the source of the goods as the Canadian subsidiary.

There was delay in the registration of the assignment, but no reliable evidence of any public confusion that the source of the goods was other than the Respondent.

The Court was, however, convinced that one of the marks had been abandoned, not having been used in Canada for a long time and there being no justifiable excuse for non-use. The other four marks had not been abandoned and thus the Respondent was successful and awarded costs.

DIRT SHIRT Airs Dirty Laundry

In Coastal Culture Inc. v. Wood Wheeler Inc., Coastal appealed a decision of the Registrar rejecting its opposition to the registration of the trademark DIRT SHIRT by Wheeler.  Wheeler applied to register the trademark DIRT SHIRT based upon use in association with its wares and services since May 1997.  Coastal opposed on the basis that Wheeler’s alleged use of the DIRT SHIRT mark was based on prior use of the marks P.E.I. DIRT SHIRT and THE ORIGINAL P.E.I. DIRT SHIRT.Coastal submitted that Wheeler should not be able to remove components of its trade-mark in order to rely on the date of claimed first use.  Coastal further submitted that the words “THE ORIGINAL P.E.I.” and “P.E.I.” formed the first part of the trademarks and were a dominant part of those marks.  Wheeler submitted that the DIRT SHIRT mark was the dominant feature on its wares, in spite of the addition of the words “P.E.I.” and “THE ORIGINAL” and submitted that this minor deviation did not constitute non-use of the mark, and should not disentitle it to registration. 

The Federal Court agreed with Coastal, granted the appeal and refused Wheeler’s application to register the trade-mark DIRT SHIRT.  Although the Federal Court accepted that the words THE ORIGINAL may be a minor variation of the alleged mark, it held that there was no evidence that Wheeler ever sold wares with the DIRT SHIRT mark, absent P.E.I.  The Federal Court concluded that the word P.E.I. had always been an element of the alleged mark, and thus the use of the trade-mark DIRT SHIRT, as a standalone mark, was not established.

Recent Trademark Court Decisions

There were three recent trademark decisions from the Canadian courts that readers may find of interest:

Expungement Allowed – In Candrug Health Solutions Inc. v. Thorkelson, Candrug and Pharmawest commenced identical applications and sought expungement of the respondent’s trade-marks in Federal Court. The proceedings were consolidated and Candrug discontinued its application. Therefore, Pharmawest was the sole applicant.

The respondent had applied and been issued registration in May 2003 for the trade-marks CANADA DRUGS and CANADADRUGS.COM. The respondent had disclaimed the exclusive right to use the words “Canada” and “Drugs” apart from the trade-marks. The Federal Court agreed with the applicant and expunged the trade-marks CANADA DRUGS and CANADADRUGS.COM on the basis that they were both clearly descriptive and deceptively misdescriptive under section 12(1)(b) of the Act. The respondent was unable to discharge his onus under section 12(2) to show the marks had acquired distinctiveness as of the date the application was filed. Therefore, the marks were not registrable and were ordered expunged.

Damages Reduced on Appeal – In 2703203 Manitoba Inc. v. Parks, the Nova Scotia Court of Appeal allowed an appeal in part and reduced the quantum of damages for copyright infringement, passing-off and interference with contractual relations awarded by the trial judge. The Court of Appeal upheld the trial judge’s finding that the appellants infringed the respondent’s copyright in the publication, Coffee News, by producing and distributing the publication, Flying Cow, in the form they did.

Witnesses at trial testified that the first several issues of the Flying Cow were published by the same printer as Coffee News and were identical in every respect including design, format, and quality and colour of the paper. Only the editorial content and the mast-head were different. The Court of Appeal also paid considerable deference to the trial judge’s advantage of seeing and hearing the witnesses and upheld the trial judge’s conclusion that the respondent was entitled to damages from the appellants for passing-off.

Referring specifically to the testimony of several witnesses, the trial judge concluded that the appellants had devised a strategy of lies and deceit in producing Flying Cow as practically identical to Coffee News, with the objective being to cause confusion so that advertisers, distributors and readers may be persuaded that the two publications were sister editions rather than competitors.

The Court of Appeal did, however, take issue with the trial judge’s calculation of damages as there was limited explanation or justification of how the amounts were arrived at. The Court of Appeal reviewed each amount and reduced the trial judge’s order of general damages from $139,000 to $70,500 and punitive damages from $100,000 to $40,000.

Challenging Official Marks – In See You In? Canadian Athletes Fund Corporation v. Canadian Olympic Committee the Applicant sought judicial review of the Registrar’s decision to grant the COC two official marks, SEE YOU IN BEIJING and SEE YOU IN VANCOUVER. The Applicant was incorporated in 1997 to raise money for Canadian athletes and had used marks such as SEE YOU IN ATHENS in the past and had applied to register the two marks at issue. The Federal Court agreed with the Registrar that the COC was a public authority since there was a significant degree of public control over it’s ongoing activities and the organization existed for the public benefit.

However, the Federal Court also concluded that a mere statement by the public authority that it had adopted and used a mark was not sufficient to prove that such adoption and use had actually occurred. A negative inference could be drawn from a failure to provide details regarding alleged adoption and use. Moreover, any such evidence must show an element of public display. Since the COC had not established adoption and use at the relevant time, the Registrar’s decision to publish notice of the adoption and use by COC of the marks as official marks was quashed. We understand that the COC is considering an appeal of this decision.

March 2007 Case Law

There were four decisions from the Canadian courts in March that readers may find of interest.

Expungement Allowed – In Inc. et al. v. Cheap Tickets and Travel Inc. the applicant sought expungement of the respondent’s trademarks in Federal Court after the respondent commenced an action in the British Columbia Supreme Court for infringement. The Federal Court agreed with the applicant and expunged the trademarks CHEAP TICKETS and CHEAP TICKETS AND TRAVEL & Design on the basis that they were clearly descriptive, noting that in effect the respondent, by registering the trademarks had “withdrawn the combination of words from use in the commercial world in Canada”.

Passing Off Claim Allowed (In Part) – In BMW Canada Inc. v. Nissan Canada Inc. BMW claimed that Nissan’s advertising of its Infiniti vehicles in association with the letter M alone and the advertising and sale of its M6 vehicle infringed BMW’s M3, M5 and M & Design marks. The Federal Court concluded that BMW’s claim of infringement under section 20 of the Trade-marks Act was not established given that there was no likelihood of confusion as to the sources of the wares or as to the wares themselves among the relevant group of prospective purchasers. Likewise, the claim for depreciation of the value of the goodwill attaching to BMW’s registered marks failed since Nissan’s use of the letter M was not a use of a registered trademark. Moreover, the evidence of loss of goodwill came from individual witnesses and there was no evidence of sales lost or a price reduction. However, BMW’s claim of passing-off contrary to section 7(b), was successful. Nissan’s use in 2005 of the letter M and of the descriptor M6 as trademarks, both similar in form to BMW’s trade-marks for similar wares, in essentially the same trade or business, created a likelihood of confusion, whether intentional or not. Nissan has applied for a stay of the order pending appeal (Nissan Canada Inc. v. BMW Canada Inc.).

Section 45 Expungement Set Aside  – Guido Berlucchi & C.S.r.l. v. Brouilette Kosie Prince was from a decision of the Registrar under section 45 of the Trade-marks Act to expunge the applicant’s trademark (a label for sparkling wines), registered in 1983. The Registrar concluded there was evidence of a sale during the relevant three-year period, but the evidence was ambiguous as to whether a registered trademark had been used. On appeal, the applicant filed a new affidavit attaching a label that was affixed to bottles sold to a distribution company during the relevant period. The Court acknowledged the evidence of a single sale, whether wholesale or retail, in the normal course of trade was sufficient to establish “use” so long as the evidence cannot be seen to be manufactured, although it was also noted that if an owner only produces evidence of a single sale, “he is playing with fire”. The Court also commented on the standard of review for an appeal of a decision under section 45, explaining that where new evidence is produced, the issue is to be decided de novo, but otherwise, for matters considered by the Registrar, the standard is one of reasonableness. After considering the new evidence of use and concluding the differences between the trademark as registered and the label actually used were not significant, the Court set aside the expungement order. The Court also concluded that the Registrar had correctly concluded that the sale to an exclusive agent was a genuine commercial transaction.

Severing Liability and DamagesOsmose-Pentox Inc. v. Société Laurentide Inc. (March 1, 2007) involved a procedural issue. The defendant applied for a second time in 4 years to sever the issues of validity and infringement from those relating to remedy. The Federal Court agreed that the circumstances had changed and the Court could revisit the severance issue. Given that discoveries had become bogged down in matters relating to the defendant’s profits, that Court concluded it was proper to sever the issue of damages and profits and first decide the issues of validity and infringement, particularly when a decision contrary to the plaintiff on these issues would render the question of damages and profits unnecessary.

Parodies of Canadian Trademarks

An earlier blog reported that the organizers of the Beijing 2008 Olympic Games have threatened legal action against pranksters who mock the Olympic brand through the use of spoofs or parodies on the Internet.

We do not propose to comment on trademark law in China. However, a review of the Canadian law indicates that in the Canadian trademark context, legal actions against pranksters poking fun, even with malice, are not likely to be successful. The Canadian Trade-marks Act is of little assistance if the pranksters do not use the marks for a commercial purpose or if the marks have been humourously altered to the extent that it is apparent to the average person that the parodies are not the work of the trademark owners.

In bringing an action the trademark owner must prove that there has been, pursuant to section 22 of the Trade-marks Act (the “Act”), a depreciation of the goodwill attaching to the owner’s registered trademark. Given the wording of section 22, there must also be commercial use of the mark.

In the leading case of Cie Générale des Éstablissements Michelin-Michelin & Cie v. C.A.W. – Canada (1996), 71 C.P.R. (3d) 348 (F.C.T.D.) (“the Michelin case”), the defendant attempted to unionize the workers of Michelin North America (Canada) and handed out pamphlets to employees parodying the Michelin corporate logo, namely the Michelin Tire Man, a beaming marshmallow-like rotund figure composed of tires. The pamphlets depicted a broadly smiling Michelin Tire Man with arms crossed, his foot raised, seemingly ready to crush underfoot an unsuspecting Michelin worker together with the caption, “Bob, you better move before he squashes you”.

The Court held that handing out pamphlets to recruit members into a trade union did not qualify as a commercial activity (i.e. use in association with wares or services) under section 4 of the Act. Moreover, the use of the trademark as a parody could not be said to depreciate the goodwill of the registered mark under section 22 because the menacing depiction was not likely to confuse the average customer that the altered mark originated with the registered owner. It is worth noting, however, that the plaintiffs were successful with their claim of copyright infringement in respect of which the Court ruled that parody was not a form of criticism, a defense to copyright infringement under what is now Section 29 of the Copyright Act.

The Michelin case was followed in British Columbia Automobile Assn. v. Office and Professional Employees’ International Union Local 378 2001, BCSC 156. This was another labour relations situation where the Court ruled that the use by the defendant of the plaintiff’s trademark for the non-commercial provision of information on the Internet did not constitute depreciation of the goodwill of the registered trademark even though one of the purposes of the website was to discourage members of the public from doing business with the plaintiff. The defendant was entitled to express its position and speak freely provided it did not violate section 22 of the Act and that “to accept the plaintiff’s argument, that the reference to an employer’s trade-mark to identify a Union site depreciates goodwill associated with that trade-mark would be a result that goes far beyond what Parliament intended by s. 22”.

An earlier case provides an illustration of a true commercial use. In Source Perrier (Société Anonyme) v. Fira-Less Marketing Co. Limited [1983], 2 F.C. 18 (T.D.), the defendant sold bottled water for $1.00 under the name “Pierre Eh”, a humourous reference to the Canadian Prime Minister at the time. The bottles were designed to resemble those used by the plaintiff, but included a disclaimer that the bottles were not to be confused with those of the plaintiff.  The Court found that this use led to depreciation of the plaintiff’s goodwill because the defendant’s commercial spoof of the plaintiff’s marks and image tended “to dilute the quality of the plaintiff’s trade-marks, to impair its business integrity established over the years, and to cause injury to its goodwill”.

Thus, trademark owners, before pursuing pranksters, will want to determine whether there is commercial use of a registered trademark, or, possibly, an infringement of copyright. Otherwise, the trademark owner may be forced to see (and live with) the humourous side of a prankster’s efforts.

December Case Law

There were three cases out of the Federal Court in December 2006 that are of interest.

In Omega Engineering, Inc. v. Omega SA, 2006 FC 1472, the Applicant was the owner of the trade-mark OMEGA and three related marks for use in association with scientific and industrial clocks and timers, amongst other measuring instruments used in science and industry. The Respondent was the owner of the mark OMEGA & Design for use in association with, among other things, “appareils techniques et scientifiques pour l’électricité, l’optique, la télégraphie, le cinéma, la radio, la téléphonie, la télégraphie, nommément: la cellules photo-électriques, portails à contact, compteurs enregistreurs sur bande de papier, pistolets de start à contacts électriques” (roughly translated as “scientific and technical instruments for electricity, optics, the cinema, radio, telegraph and telephone, namely photocells, contact points, recording meters on paper tape, starting guns with electrical contacts”). The Applicant sought to have the registration for OMEGA & Design amended to change the general description to another general classification or, alternatively, have the mark removed from the Register on the basis that it had been abandoned.  Interestingly, the Respondent had registered its mark in 1895 and had commenced separate opposition proceedings as against the Applicant. The Applicant had initially brought a section 45 proceeding (“non-use”) seeking to expunge the registration for OMEGA & Design. That application proceeded to the Federal Court of Appeal where the Court found that the mark could not to be expunged for non-use and that the trial judge could not amend the statement of wares on a section 45 proceeding.

The Applicant’s further application also failed. The Court held that there was evidence that the Respondent’s wares fell within the general classification and it was not open to the Court on a section 57 proceeding to substitute another general description of the wares. The latter could only be achieved in the course of opposition proceedings. The Court also concluded that the Respondent’s mark had not been abandoned and that there was use of OMEGA & Design with the specific wares that followed the general classification.

In International Taekwon-Do Federation et al. v. Choi et al., the International Taekwon-Do Federation (ITF) and its Canadian affiliate, the Canadian Taekwon-Do Federation International (CTFI), brought a section 57 (expungement) application arguing that the trade-marks registered by the Respondents were invalid (TAE KWON-DO & Design, along with 3 others). The Respondents were a former officer of the ITF and a joint venture between him and his father, the original founder of the ITF. The Court agreed that the marks were invalid, noting that the Respondents were not entitled to register the trade-marks because they would be confusing with marks that had been previously used by the Applicants. Also, any use that the Respondents might have made of the marks would have been use on behalf of the Applicants given that the individual Respondent and his father were officers of the ITF and had a fiduciary duty towards it. Moreover, the marks could not be said to be distinctive of the Respondents’ wares or services given the Applicants’ prior use of the same marks. The Court also noted that an importer or agent has no right to register a trade-mark owned by a foreign principal under his own name and for his own benefit. In this regard, the Court relied on Citrus Growers Assn. Ltd. v. William D. Branson Ltd. (1990), 36 C.P.R. (3d) 434.

In Jagotec AG v. Riches, McKenzie & Herbert LLP, the Applicant successfully appealed a decision of the Registrar of Trade-marks to expunge its mark under section 45 for non-use. On the Appeal, the Applicant was entitled to file additional evidence that was not before the Registrar of Trade-marks. Although the evidence was from the original owner of the mark and not the Applicant itself, there was evidence that in the three years prior to the section 45 proceeding being commenced, the trade-mark was used through the sale of the wares in Canada in containers or packages bearing the words VISIBLE YOUTH.