Expungement: A Poisoned Trademark – for Both Parties

In JAG Flocomponents N.A.  Inc. v. Archmetal Industries the Plaintiffs sought expungement of the Canadian trademark FUSION, as well as a declaration that the Defendants had breached section 7(a) of the Trade-marks Act.  The trademark was registered for  use in association with ball valves for industrial use and use was claimed since as least as early as September, 2002.

One of the Defendant companies had been a 30%  owner  of one of the Plaintiff companies and a Letter of Intent had been executed setting out the basic relationship whereby the Plaintiff s were to distribute valves manufactured by the Defendants in China.  The parties had also executed a Consignment Agreement which the Court found to be a critical document since clause 12 specified that the intellectual property arising by virtue of the Agreement was deemed to be equally owned by the parties. 

For marketing purposes, the Plainitffs adopted the trademark FUSION and proceeded to market wares manufactured by the Defendants, as well as wares sourced from a different manufacturer, using the trademark.  However, following the breakdown of the relationship, one of the Defendants registered the trademark.  The disputes arising between the parties were eventually settled under an Alberta Queen’s Bench action, which left only the intellectual property issues unresolved. The Plaintiffs had also applied to register the trademark, but the Defendants successfully opposed the application on the basis of alleged prior use.  Read more

Beer, Trademarks and the Jurisdiction of the Opposition Board

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

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.

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.

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.

Evidentiary Omissions Lead to Trademark Appeal

The recent Federal Court case of Sanders v. Smart & Biggar Intellectual Property and Technology Law is a good example of the difference that well prepared evidence can make.  The Trademarks Opposition Board expunged the applicant’s trade-mark, “UGGLY BOOTS” pursuant to section 45 of the Trade-marks Act because the applicant had not demonstrated use of the trademark in Canada.  The Board found that the applicant’s evidence was “rampant with ambiguities” and omissions. 

The applicant appealed to the Federal Court pursuant to section 56 of the Act.  The applicant was allowed to present new evidence and the appeal was treated as a new hearing.  The applicant’s new evidence consisted of the affidavits of five clients, which all showed the transfer of wares with the trademark.  The affidavits also attached invoices proving the transfers took place.  The Court found that this new evidence went beyond mere allegations of use, noting that the applicant was only required to produce “evidence of a single sale, whether wholesale or retail, in the normal course of trade” so long as the sale was not deliberately manufactured or contrived to protect the registration of the trademark.  In applying the principle of use “in the normal course of trade”, the Court also noted that good faith is presumed when there is no evidence challenging the affiant’s credibility.  Thus, the Court found in the applicant’s favour, something the Board might have done if better evidence had been presented at first instance.

Proposed Practice Notices: Professional Designations and Abbreviations, Acronyms and Initials

The Canadian Intellectual Property Office has initiated two short consultations (January 29 to February 28, 2010) for proposed Practice Notices regarding section 12(1)(b) of the Trade-marks Act.  Section 12(1)(b) provides that “a trademark is registrable if it is not, whether depicted, written or sounded, either clearly descriptive or deceptively misdescriptive in the English or French language of the character or quality of the wares or services in association with which it is used or proposed to be used or of the conditions of or the persons employed in their production or of their place of origin”. The two proposed Practice Notices address the application of 12(1)(b) to professional designations and to abbreviations, acronyms and initials.

If research discloses that an applied for trademark consists of a professional designation, the examiner will apply a first impression test to determine whether a consumer would assume the goods and services are produced by a professional with a designation similar to the applied-for trademark and if so, the trademark will be unregistrable, being clearly descriptive of the persons employed in the production of the wares and services.  The addition of an abbreviation, acronym or initial to the professional designation will not make the trademark registrable.

A trademark that consists of or contains an abbreviation, acronym or initial will be considered unregistrable if considered as a whole and if as a matter of first impression the abbreviation, acronym or initial is clearly descriptive or deceptively misdescriptive of the wares and services.  Moreover, the addition of an abbreviation, acronym or initial to a clearly descriptive word or phrase will not render it registrable as a trademark.

The changes arise in light of a recent Federal Court decision, College of Traditional Chinese Medicine Practitioners and Acupuncturists of British Columbia v. Council of Nature Medicine College of Canada, that considered some 39 trademark applications and registrations containing abbreviations, acronyms and initials and allegedly confusing with certain professional designations. Read more