Canadian Trademark Registrations Expunged

Following up on a case we first told you about in March 2007, Canada’s Federal Court of Appeal recently delivered its judgement in the case of Cheap Tickets and Travel Inc. v. Emall.ca Inc.

Disputes between these parties have been underway for some time. In 2002, Cheap Tickets obtained Canadian trademark registrations for CHEAP TICKETS and CHEAP TICKETS AND TRAVEL & DESIGN for use in association with a range of travel agency and other ticketing-related services, claiming use in Canada dating back to July 1997. Emall obtained the domain name cheaptickets.ca in 1999.

In 2003, Cheap Tickets tried to use the CDRP to stop Emall from using the cheaptickets.ca domain. This effort failed, so in late 2004, Cheap Tickets took to the courts, commencing a trademark infringement action against Emall in the Supreme Court of British Columbia.

Likely tired of Cheap Tickets’ attacks, Emall commenced an action in the Federal Court of Canada to expunge Cheap Tickets’ trade-marks. And the Federal Court obliged: concluding that the marks were clearly descriptive of the character or quality of the services in association with which they were registered, the Court expunged Cheap Tickets’ trademarks.

On appeal to the FCA, Cheap Tickets made a variety of arguments: that their marks were not “clearly descriptive” but rather “merely suggestive;” that their marks had acquired distinctiveness at the time applications to register them were filed; that the Design mark contained unique and distinct visual elements, entitling it to remain on the Register.

Again, all of Cheap Tickets arguments failed. The Federal Court concluded that no errors of fact or law could be found in the Trial Division’s judgement; accordingly, Cheap Tickets’ appeal was dismissed.

Beyond serving as another example of the maxim “turnabout is fair play”, there are a couple of important lessons for both trademark owners and advisors arising from this case. For trademark owners, this case is a prime example of the perils of selecting and using trademarks that are strongly suggestive of the products and services offered in association therewith. Such marks, even if secured by a registration, typically enjoy a narrow scope of protection, are highly susceptible to attack, and should be avoided. In addition, if you have already registered trade-marks that “push the limits” of descriptiveness, consider if it is possible to file supporting applications for those marks on the basis of acquired distinctiveness. Had Cheap Tickets done so, or if they had been able to establish acquired distinctiveness at the time of their original filings, they likely would not have lost their registrations.

For advisors: remember that once judgment is rendered and an order made by a court, the Registrar of Trademarks will not tarry in acting upon it, unless a stay is in place. Though it filed an appeal, Cheap Tickets did not seek a stay of the trial judge’s expungement order; accordingly, the Registrar struck Cheap Tickets’ marks from the Registry before the order’s appeal period had even expired. Had a stay been obtained, Cheap Tickets’ registrations would have remained on the Registry through the appeal period, and could have been used to assert claims against third parties while it awaited its hearing before the Federal Court of Appeal.

Judging A Wine By Its Label: A Trademark Issue

In Sociedad Agricola Santa Teresa Ltda. et al. v. Vina Leyda Limitada, the Federal Court considered what constitutes a place of origin for wine such that the place name cannot be registered as a trademark. At issue was section 12(1)(b) of the Canadian Trade-marks Act which states that a trademark is not registrable if it is “clearly descriptive or deceptively misdescriptive” of the “place of origin” of the wares or services.

Vina Leyda Limitada applied in 2001 to register LEYDA as a trademark and on the evidence before the Registrar in an opposition to such application, the Registrar allowed the application. The Sociedad appealed the Registrar’s decision under section 56 of the Act.

The Court allowed the appeal and held that LEYDA could not be registered. According to Harrington J., “Once the Registrar found as a fact, as he did, that Leyda is a wine producing region in Chile, as a matter of law he was required to conclude on the record before him that the opposition was well founded.” Of concern was the fact that if the registration stood the applicants, wine producers from the Leyda Valley, would not be able to refer to that fact on their labels or in their promotional literature and might be limited to calling their wine Chilean red or white. The judge also noted that “producers from a specific region want to promulgate their area in the belief that their wine is superior to the wine of that country as a whole”. A general appellation could lead a consumer to believe a wine is “plonk”.

In reaching his decision Harrington J. relied on a 1970 Supreme Court of Canada decision, Home Juice Co. v. Orange Maison Ltee, for the proposition that “a shrewd trader should not be permitted to monopolize the name of a foreign wine district in Canada by registering it as a trademark”. He also distinguished Prosciutto di Parma v. Maple Leaf Meats Inc. in which the Federal Court of Appeal refused to expunge the trademark PARMA since it had been used in Canada for 39 years and registered for 26. LEYDA had not been in use in association with wine in Canada at the time the application was filed.

On an appeal under section 56 the parties may introduce evidence that was not before the Registrar and the Sociedad put forward that “Vallee de Leyda” was an appellation of origin in Chile. This evidence was taken into account, but Harrington J. specifically noted that whether a name signifies a geographical area under section 12 of the Act and whether that area produces wine are not contingent upon a governement decree.

Finally, it is worth noting that Harrington J. may very well know something about wine. He not only references the origin of the word “plonk” (“There are different legends as to the origin of the word ‘plonk’. The one I prefer is that a Monsieur Plonque was the purveyor of cheap wine to British Troops in World War I.”), but he also begins his reasons stating, “One may not be able to judge a book by its cover, but one should know something about a bottle of wine from its label; the more the better.”

More On Section 45

Last week we reported on a decision of the Federal Court, Trial Division. The Federal Court of Appeal has also handed down a recent section 45 decision referring to the section as the “‘use it or lose it’ provision for removing ‘deadwood’ from the Register”.

In Bereskin & Parr v. Fairweather Ltd. the Court refused the appeal on the basis that the trial judge’s application of the law to the undisputed facts disclosed neither a palpable and overriding error on a question of mixed fact and law, nor a readily extricable error on a question of legal principle.

The trial judge had allowed the appeal from the Registrar of Trade-marks decision to expunge the trademark TARGET APPAREL for use in association with “men’s clothing, namely, suits, pants, jackets and coats”. The trademark had been acquired by Fairweather Ltd. from another company. In front of the Registrar, Fairweather had failed to produce evidence demonstrating a serious intention to use the mark. Such evidence can constitute special circumstances and excuse the absence of actual use in the preceding 3 years. However, when Fairweather appealed under section 56 of the Trade-marks Act, it filed new evidence (which is allowed on a section 45 appeal) and provided the judge with preliminary design and artwork showing an ongoing intention to use the mark. There was also evidence of sales after the date of the section 45 notice that gave credibility to the evidence of an intention to use. Thus, use was established.

Clear Evidence of Use Required: Section 45 Appeal Allowed

Section 45 of the Trade-marks Act allows the Registrar, at the written request of any person, to give notice to the registered owner of a trademark requiring the registered owner to furnish, within three months, an Affidavit or Statutory Declaration showing that the trademark has been used in association with each of the wares and services specified in the registration during the preceding three-year period.

In 88766 Canada Inc. v. Monte Carlo Restaurant Limited Justice Pinard of the Federal Court allowed an appeal from the decision of the Registrar of Trade-marks and expunged the mark. The mark at issue was MONTE CARLO that was registered for use in association with the wares “pizza and spaghetti” and the services “operation of a restaurant, food take-out and catering, operation of a bar and operation of a banquet hall”. On the basis of the Affidavit evidence furnished by the owner of the mark, the Registrar struck out only “operation of a bar and operation of a banquet hall”.

The Court first noted, given there was no new evidence filed on the Appeal (an option where there is an appeal from a section 45 mark), that the standard on the Appeal was one of reasonableness. The Court then reviewed the Affidavit furnished by the registered owner and concluded that it did not clearly establish use during the relevant period. Thus, the mark was struck from the registry.

It was not sufficient to simply establish that advertising materials had been distributed in the previous five years.  The Court noted that there was nothing specifically stated regarding distribution during the preceding three-year period and noted that it was up to the owner of the mark to provide clear proof regarding use. The Court also referred to BMW Canada Inc. v. Nissan Canada Inc., a case that we previously commented on, for the proposition that the appearance of a trademark in an advertisement does not constitute use in association with wares unless the advertisement is distributed at the time of the transfer of the property in or the possession of the wares.

The Federal Court of Appeal Rules on Appeals from Decisions of the Registrar

In Sadhu Singh Hamdard Trust v. The Registrar of Trade-marks, the Federal Court of Appeal refused to interfere with a decision of the Registrar allowing the registration of a trademark, particularly where the Appellant had not exercised another more appropriate remedy.

When the trademark at issue was advertised the Appellant requested a two-month extension to file a Statement of Opposition. However, the request for an extension was overlooked by the Registrar and the trademark was allowed.

The Appellant then sought to appeal the Registrar’s decision to the Federal Court under section 56 of the Trade-marks Act. The Trial Court concluded there was no decision of the Registrar to be challenged and the Federal Court of Appeal agreed.

The Appellant had failed to invoke its right under section 39(3) of the Act which specifically provides that the Registrar may withdraw an allowance where it has failed to consider a previously filed request for an extension of time to file an opposition.

The Appellant, relying on the earlier case of Ault Foods v. Canada (Registrar of Trade-marks), argued that it was still open to the Court to rely on its discretionary power under section 18 of the Federal Court Act and set aside the registration.

However, the Court of Appeal noted that following Ault Foods, the Trade-marks Act was amended so as to add section 39(3).

The Court also noted that in seeking to set aside the Registrar’s decision the Appellant was in effect seeking expungement, which required a challenge on substantive grounds under section 57. In Bacardi & Co. v. Havana Club Holding S.A. the Court held that a registration may not be brought into question in the course of opposition proceedings, which was what the Appellant was seeking to do by appealing the Registrar’s decision under section 56.

City and Mayor Settle Up

In our posting of June 25, 2007 we reported on an application by the Mayor of the City of Vancouver to register the mark ECODENSITY in his own name. The application raised a few eyebrows because on the face of it, the program that the mark related to appeared to be one that the City had funded and it wasn’t clear why the Mayor would be filing an application in his own name rather than in the name of the City.

Following the advertisement of that application, the City of Vancouver Councillor’s Office filed an Opposition. According to the Canadian Intellectual Property Office online database, matters seem to finally have been resolved between the City and its Mayor, as the application has now been assigned to the City. As one of our readers has noted, the open question now is whether that application, which was based on proposed use, or any resulting registration will be valid, if in fact the Mayor, as he claimed in a news report at the time, never had the intention to use the mark himself.

Penny For Your Thoughts

The lowly Canadian penny (to be fair, it’s currently worth more than it’s American counterpart) has been the subject of some intense legal discussions lately, according to a recent story in the Globe and Mail. This story highlights the importance of protection for trademarks under both trademark and copyright law in Canada.

 The Royal Canadian Mint has taken issue with the apparently unauthorized use of a Canadian penny design by the City of Toronto as part of an ad campaign which appears on posters on buses and in bus shelters and on bumper stickers and buttons. The campaign is part of the City’s attempt to convince the Federal Government to provide more funding to municipalities, specifically one cent out of every six collected by the Federal Government through the Goods and Services Tax. The penny design is also featured on the City’s Onecentnow.ca webpage

According to the story, the Mint claims ownership of intellectual property rights  in the design of the penny and is demanding that the City stop all use of its design and payment of a licensing fee for past use. While the news story doesn’t get into the legal specifics, the Mint is likely  relying on both copyright and its Official Mark status for the penny design. The Mint caused the Registrar of Trade-marks to publish a notice in the Trade-marks Journal on June 2, 2004, of the Mint’s adoption and use of the penny design as an Official Mark. Once such notice is published, Section 9 of the Trade-marks Act prohibits any other person from adopting, using or registering that mark in connection with a business, as a trademark or otherwise – a very strong form of protection available only to Canadian public authorities – basically government entities and entities over which there is significant ongoing governmental control – and universities. From the article, it appears the City is asserting a defence that it is using the penny design for educational purposes, but it’s not clear that even educational use is permitted under Section 9 without the consent of the owner.

The Mint may also be able to assert its copyright against the City, irrespective of the Official Mark issue, assuming ownership, originality, subject matter, fair dealing and related issues are not a problem. Copyright provides a very different cause of action than trademark – once a copyright protected work is copied, it’s irrelevant to a claim of infringement whether the copy is being used in association with any wares or services.