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.

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.

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.

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.

March 2007 Case Law

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

Expungement Allowed – In Emall.ca 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.

iPhone Trademark Dispute Goes Canadian

In an update to our January 11, 2007 posting on Apple Computer Inc.’s troubles with it’s proposed iPhone trademark in the U.S. and Canada, Toronto based Comwave Telecom Inc. is continuing with it’s opposition to Apple’s application to register the iPhone mark in Canada on a proposed use basis. Even though Comwave filed its application to register the mark in Canada after Apple did, Comwave claims to have used its iPhone mark in Canada since 2000 in association with local and long distance telephone services and VoIP telephone services. Under Canadian trademark law, it appears to have the upper hand if it can prove its prior use claims.  

Comwave is also threatening to go after Cisco for promoting its iPhone products in Canada. However, if Cisco’s claims are true that it has no sales of those products in Canada at this time, Comwave’s threats appear to be more of a shot over the bow.