“Bad Faith” Decisions Bad News for Trademark Applicants?

The following article, authored by Jeffrey Vicq, was originally posted on the IPiloguea 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

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

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

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.

Special Circumstances Excuse Non-Use of Trademark

Cobalt Brands, LLC v. Gowling Lafleur Henderson LLP concerned the registration of the mark USQUAEBACH & Design for use in association with blended Scotch Whiskey. The mark was registered in 1977 by a U.S. company which suspended production and sales in 2003 after the death of two owners holding a 95% interest. Van Caem, a Dutch liquor company and creditor, acquired the mark and assigned it to its Belgian subsidiary, but the owner of Van Caem died and Van Caem and its subsidiaries were forced to liquidate, which involved a lengthy process. The registered owner, Cobalt Brands, purchased the mark in 2007 and the assignment to Cobalt Brands was recorded by the Registrar. However, the section 45 expungement notice sent by the Registrar was not received by Cobalt Brands and the Registrar expunged the registration.

Cobalt Brands appealed. Cobalt Brands agreed the mark had fallen into disuse, but argued that special circumstances excused the non-use and the Court agreed.

The Court noted that Cobalt Brands was not prohibited from adducing evidence before the Federal Court simply because none was produced before the Registrar and that it was entitled to produce more than one affidavit. Read more

A Confusing Trademark VIBE

In Vibe Media Group LLC v. Lewis Craig Trading as VIBETRAIN the Federal Court of Canada set aside a decision of the Opposition Board and allowed the opposition to the application to register the mark VIBETRAIN.  The application was based on proposed use in Canada in association with wares and services that included sound recordings, printed promotional materials, magazines, clothing and souvenir items and entertainment services involving the provision of musical and entertainment performances in live, television, video and Internet media.  The opponent was a company with which Quincy Jones had an association and held the trademark rights, including an application and two pending applications, for VIBE, a popular magazine focusing on urban culture.

The Opposition Board member found that “vibe” was not inherently distinctive, relying on an earlier decision of the Court, Vibe Ventures LLC v. 3681441 Canada Inc.  The Board also found that VIBETRAIN consisted of two ordinary dictionary words that were disconnected from their respective meanings and which, when juxtaposed, were inherently distinctive.  The Board member referred to the Oxford English Dictionary for the definition of “vibe”.  Before the Court, the  Opponent argued that other dictionaries did not define “vibe” and it was therefore not an ordinary dictionary word.

On appeal, the Court found that “vibe” may no longer be inherently distinctive, but through continuous use it had become suggestive of the Opponent’s magazine, something the Board had acknowledged in its decision.  The Opponent also submitted new evidence on the appeal to show that the word “train” suggested a series of musical performances, that no other magazine titles in Canada began with VIBE and that VIBE had been used in Canada with programs, websites, books and recordings related to music.

The Court concluded there was a broad overlap in the music, culture and clothing wares and services that the VIBE and VIBETRAIN trademarks sought to identify, as well as similar channels of trade, since both targeted people with an interest in music, entertainment and culture.  Thus, there was a likelihood of confusion for a “casual consumer somewhat in a hurry”.

Confusing CANNABIS CULTURE

The Friendly Stranger Corporation v. Avalon Sunsplash Ltd.was an appeal of a decision of the Trade-marks Opposition Board refusing several trademark applications filed by the Applicant.  The Applicant sells products related to hemp and marijuana through its Toronto store, The Friendly Stranger Cannabis Culture Shop, and sought to register CANNABIS CULTURE SHOP, CANNABIS CULTURE SHOP & Design and FRIENDLY STRANGER CANNABIS CULTURE SHOP & Design.  The Opponent, Avalon Sunsplash Ltd., publishes a bi-monthly magazine called “Cannabis Culture”, operates a store in Vancouver and maintains a website at cannabisculture.com.

The Opposition Board had concluded that “the distinctiveness of the Opponent’s mark was sufficient to negate the distinctiveness of the applied for mark”.  Notwithstanding additional evidence filed on appeal, the Federal Court agreed, noting the similarity of the wares and services, and that the only difference between the Applicant’s mark, CANNABIS CULTURE SHOP, and the Opponent’s mark, CANNABIS CULTURE was the use of the word “shop”, which was not in itself inherently distinctive.

The Opposition Board had also refused FRIENDLY STRANGER CANNABIS CULTURE SHOP on a balance of probabilities, since it resembled the Opponent’s mark and both parties targeted the same market.  However, the Federal Court was satisfied that this mark should be allowed since additional evidence shifted the emphasis to the words “Friendly Stranger” from “Cannabis Culture Shop”.

The Court also considered section 6(2) of the Trade-marks Act, which provides that a trademark causes confusion with another trademark if the use of both trademarks in the same area would lead to the inference that the wares or services associated with the trademarks are marketed by the same person.  On this point the Court referenced the finding in United Artist Corp. v. Pink Panther Beauty Corp. [1998] F.C.J. No. 441 that “the question posed by [section 6(2)] does not concern the confusion of the marks, but confusion of goods or services from one source as being from another source”.  Although the wares of the parties were similar, the Court was satisfied there was also no confusion as to source since the marketplaces were very different.  Friendly Stranger Cannabis Culture shop had a strong presence in Toronto, while the Opponent’s marketplace was Vancouver.  Moreover, the internet sales were only a small fraction of what was sold in the stores and the domain names of the parties were very different.  Presumably, if the Opponent had had a stronger internet presence the Court might have found confusion on the basis of section 6(2) since it would have then been difficult to differentiate the “marketplaces” in Vancouver and Toronto.  However, this was not the case.