Case Law

First Canadian Decision on Keyword Advertising

By In Case Law, Protection & Enforcement

The British Columbia Supreme Court recently issued the first Canadian Court decision dealing with the use by one party of another party’s trademarks in keyword advertising.  The case involved a defendant, Vancouver Career College (Burnaby) Inc. (VCC), that provides post-secondary career training services under different business names and trademarks.  As part of its internet marketing strategy, VCC, like numerous other businesses, uses keyword advertising, whereby VCC pays search engines such as those provided by GOOGLE and YAHOO! for links to its websites to appear as “sponsored links” or “‘sponsored results” alongside the search engine’s normal search results.  In order to use keyword advertising, VCC selected certain keywords to describe its website, including the business names and trademarks of various VCC competitors.

The plaintiff, the Private Career Training Institutions Agency (Agency) is a provincial regulatory agency charged with overseeing career training institutions that operate throughout the Province of British Columbia.  Acting on complaints received from other career training institutions in the Province, the Agency sought an injunction against VCC’s practice of using the names and trademarks of those other institutions in VCC’s keyword advertising program, on the basis that such use was false, deceptive or misleading.  The Court held that VCC’s keyword advertising program was not false, deceptive or misleading and therefore no injunction was granted.

While framed as a false, deceptive or misleading advertising complaint, rather than a trademark infringement or passing off claim, the Judge in his reasons specifically referenced trade-mark and passing off concepts when looking at the issue of what is confusing or misleading in the context of alleged improper advertising.  The Judge found that what the defendants were doing did not amount to false, deceptive or misleading advertising.  The Judge also held in his reasons that: “I also accept VCC Inc.’s argument that its practice of using Keyword Advertising is no different than the time-honoured and generally accepted marketing practice of a company locating its advertisement close to a competitor’s in traditional media (e.g., placing its Yellow Pages advertisement next to or in close proximity to a competitor’s telephone number  in the same directory so that potential customers of that competitor discover there is another company offering a similar product or service and that they, the consumer, have a choice).”

The Agency has until June 28, 2010 to file an Appeal of the decision, should it choose to do so.

Beer, Trademarks and the Jurisdiction of the Opposition Board

By In Case Law, Registration, Trademark Oppositions

Molson Canada 2005 v. Anheuser-Busch, Incorporated, a decision of the Federal Court and another case in an ongoing “beer war”, provides an interesting analysis of the jurisdiction of the Opposition Board. The Opponent before the Opposition Board, Molson, through a predecessor in title, held the registered trademark for the label for Standard Lager:

Standard Lager Mark

(“the Standard Lager Mark”) a beer continuously sold in Canada since 1926, but almost exclusively in the province of Manitoba. Anheuser-Busch, the Applicant before the Opposition Board, had two labels that were registered as trade-marks:

Registered Anheuser-Busch Marks

(“the Registered Anheuser-Busch Marks”). The opposition arose when Anheuser-Busch sought to register an “updated” version of its two previously registered marks (“the Proposed Anheuser-Busch Marks”).

The Federal Court reviewed the litigation history arising in respect of the earlier registered marks, including a 1986 Federal Court of Appeal decision, Carling O’Keefe Breweries of Canada Ltd. v. Anheuser-Busch Inc., which concluded that the Standard Lager Mark and the Registered Anheuser-Busch Marks were confusing, that there was some sort of impropriety when the Standard Lager Mark was originally registered in 1929 since it was inspired by and designed with knowledge of the BUDWEISER label, but Carling (Molson’s predecessor in title) could rely on the equitable defence of laches and thus there was no basis for expunging either the Standard Lager Mark or the Registered Anheuser-Busch Marks.

The Opposition Board allowed the registration of the Proposed Anheuser-Busch Mark as it applied to clothing since Molson had not established that the ambit of protection accorded to the Standard Lager Mark included wares other than beer. With regards to use in association with beer the Opposition Board determined that it could limit the scope of protection afforded the Standard Lager Mark since the Court of Appeal had determined it was wrongfully obtained. Thus, Molson’s opposition with regards to use in association with beer was rejected.

The Federal Court disagreed and allowed the opposition with regards to use in association with beer. The Court was particularly concerned that the Opposition Board had exceeded its jurisdiction, since it is limited in an opposition proceeding to determining if a trademark is or is not registrable. Thus, for example, if there is a confusing mark on the register, the new mark cannot be registered. However, if the existing registration of an invalid trademark is interfering with the registration of a new trademark, it is up to the applicant for the new mark to take the necessary steps, usually an expungement application to the Federal Court, to get the register corrected. In an opposition proceeding, the validity of an opponent’s registered mark is not in issue.

The Federal Court was concerned that the Opposition Board could not limit the ambit of protection afforded the Standard Lager Mark on the basis that the Court of Appeal had questioned the lawfulness of the registration. Indeed, the Court of Appeal had not found the registration of the Standard Lager Mark was unlawful, but had instead found that the registration was not a nullity. Thus, Molson was relying on a valid registration and the question to be answered was whether the Proposed Anheuser-Busch Mark was confusing with the Standard Lager Mark. The Federal Court concluded they were confusing, applying the test in section 6(5) of the Trade-marks Act and giving particular weight to two surrounding circumstances: (1) that the Court of Appeal had found the Registered Anheuser-Busch Marks confusing; and (2) an acknowledgement in the Memorandums of Fact and Law filed by both the parties that the marks were confusing.

The beer wars continue and we may very well see an appeal.

Feud Over Family Name Spills Into Federal Court

By In Case Law, Protection & Enforcement, Registration

In a recent decision of the Federal Court Trial Division, the registration of the mark STENNER was expunged on the basis that it was not distinctive. 

STENNER was registered as a trademark in the Canadian Intellectual Property Office (“CIPO”) in 2005.  The Application, filed in 2003, was objected to by the CIPO Examiner on the basis that the mark was primarily merely the surname of an individual.  That objection was overcome when the Applicant provided sufficient evidence of secondary distinctiveness – i.e. evidence that the mark was recognized as the source of the Applicant’s financial services and newsletters, as much or more than than it was recognized as a surname.  The Application was not opposed by anyone.

The Federal Court found that the evidence established that the registered owner had used the STENNER mark on and off over the years, commencing in the late 1980’s, though rarely, if ever, as a standalone mark and periods of use had been punctuated by lengthy periods of non-use.  In the early 2000’s, the principal of the registered owner had a bitter falling out with his two children who were also in the financial services industry and who also used the STENNER name in association with the performance of their services.  That falling out had been the subject of a separate lawsuit, however the Court in those proceedings specifically declined to rule on the validity of the trademark registration for STENNER.

The application to expunge the registration for STENNER was based on various grounds, but the argument that won the most favour with the Federal Court was that the mark was no longer distinctive (assuming it ever had been), due to extended periods of non-use, lack of use as a standalone mark and the results of expert evidence on the recognition of the mark as a source indicator for the registered owner’s services.   The expert evidence put forward showed that the mark was recognized by virtually no one outside of the Lower Mainland of British Columbia and even within that region, the recognition factor was very low.  Also, the use of the same mark by the two children in the same industry and geographic area also pointed to a lack of distinctiveness.

In the end result, the Federal Court ordered the expungement of the registration for the STENNER mark.  There is no indication yet of whether an appeal will be filed, though the deadline for doing so is fast approaching.

“Bad Faith” Decisions Bad News for Trademark Applicants?

By In Case Law, Protection & Enforcement, Trademark Oppositions

The following article, authored by Jeffrey Vicq, was originally posted on the IPilogue—a co-operative blog hosted on the IP Osgoode website of York University’s Osgoode Hall Law School.

Those of us who provide trademark prosecution and counselling services—and particularly those of us who work with clients that have multi-national trademark portfolios—know that clients are sensitive to developments not only in Canadian practice, but also in other key markets around the world.  Many of my clients were concerned about a line of United States cases, decided over the last several years, that regarded innocent filing errors in applications, renewal forms, and other correspondence with the US Patent and Trademark Office as attempts to perpetrate a fraud on the Office, justifying refusal, expungement, or some other highly punitive penalty.  These decisions had effectively broadened the notion of “fraud” on the USPTO to include innocent mistake and negligence.

However, it appears generally acknowledged that this trend halted in 2009 with a decision titled In re Bose Corp. In the most general terms, Bose served to restore the concept of fraud on the Office to a more conventional meaning.  Now, only if an applicant knowingly makes a false, material representation with the intent to deceive does their action rise to the level of fraud, meriting harsh punishment.

However, I am becoming concerned we may be seeing the start of a trend in Canada toward permitting challenges to applications for alleged lack of good faith akin to what our US friends experienced pre-Bose.  In decisions released over the last two years, the Canadian Trade-marks Opposition Board appears to be breathing new life into the ability of opponents to challenge applications on the basis of good faith. Read more

When Prior Use is not Prior Use

By In Case Law, Legislation, Registration

In an update to an earlier post, the Supreme Court of Canada has recently granted leave to appeal in the case of Masterpiece Inc. v. Alavida Lifestyles Inc.    Both the Federal Court Trial Division and the Federal Court of Appeal held that, in a proceeding to expunge a Registration, the relevant date for determining whether there was confusion with a mark previously used in Canada is the date that the application was filed, and that likelihood of confusion at a point in the future is not a relevant consideration. 

In addition, both of the earlier decisions stated that in order for prior use of a mark in Canada to be grounds for successfully expunging a registration, such prior use must have occurred in the same geographic area where the applicant used its mark; otherwise there could have been no likelihood of confusion at the time the application was filed.   In coming to the latter conclusion, both Courts appear, at least with respect to an action for expungement of a registration, to have imported into the test for likelihood of confusion, the test for common law passing off.   Given this, the decision of the Supreme Court of Canada on this issue will be eagerly awaited by practitioners.

Stripes Applied to Toothpaste: A Registrable Trademark

By In Case Law

In Procter & Gamble Inc. v. Colgate-Palmolive Canada Inc. the Federal Court agreed with the Opposition Board that none of the six grounds advanced by Procter & Gamble, the opponent, could succeed against Colgate-Palmolive’s application to register its Striped Toothpaste Design – Green/White/Blue Stripes (the “Design”).

Three of the grounds advanced are of interest:

(1) that the Design was not registrable as of the filing date of the application (1994) because the Design was being applied to the wares for the purpose of decoration only and not for the purpose of distinguishing the applicant’s wares;

(2) that the Design was not registrable as of the filing date because the Design was primarily functional and registration would give Colgate-Palmolive a monopoly on functional elements or characteristics (i.e. stripes) of toothpaste; and Read more

No Summary Expungement of Trademark if Sublicensing Properly Documented

By In Case Law, Registration

In Tucumcari Aero, Inc. v. Cassels, Brock & Blackwell LLP, a section 45 summary expungement action, the Registrar was satisfied that Tucumcari Aero, Inc., the owner of the trademark MOTO MIRROR & Design, had established use of the mark in association with truck and commercial vehicle mirrors. However, the Registrar also concluded that the evidence regarding the licences in place and Tucumcari’s control over the character and quality of the wares was ambiguous.

On appeal to the Federal Court the central issue was whether Tucumcari had filed sufficient additional evidence regarding its licensing arrangements, which involved a licensee and sublicensee, so as to establish that it had control over the character and quality of the wares. The Respondent agreed that sublicensing was permitted under section 50(1) of the Trade-marks Act, but argued that the indirect control contemplated by the Act required an express condition in the sublicensing agreement requiring the registrant to determine whether the character and quality of the wares are maintained. The Court disagreed, holding that the  registrant’s control of its contractual rights through the intermediary was sufficient and express language was not required.

The Court was also satisfied that an express provision authorizing sublicensing was not required and, even if Tucumcari had not specifically agreed to the sublicensing, there was evidence it had acquiesced. Moreover, a provision that allowed the sublicensee to ultimately buy the trade-mark did not mean Tucumcari was not using the mark in the interim, since it retained ownership and had an interest in preserving the goodwill until such time as it ultimately assigned its interests.