No Trademark Monopoly: Red Horse / Black Horse

Red Horse Black Horse

In January 2013 the Federal Court considered whether an ordinary beer drinking consumer, on hearing the words RED HORSE, would likely think that RED HORSE must be a beer made by the same company that makes BLACK HORSE.  The Court’s response: “unlikely”.

This decision was reached in San Miguel Brewing International Ltd v. Molson Canada, in which the Federal Court allowed an appeal by San Miguel from the refusal of the Trade-Mark Opposition Board to register San Miguel’s RED HORSE trademark and horse head design.

In the proceedings before the Board, the Member analysed the surrounding circumstances to determine whether the RED HORSE mark was confusing with the  BLACK HORSE trademark in the minds of the relevant consumer.  The Member found that the RED HORSE mark had noteworthy design features, but the word HORSE in the mark rendered it too similar to the BLACK HORSE mark.  Accordingly, the Board denied registration on the basis of confusion.

On appeal, Justice Phelan of the Federal Court applied the well-established test set out in the Supreme Court of Canada decision of Masterpiece  Inc. v. Alavida Lifestyles Inc., emphasizing that one has to: (1) look at the mark as a whole and not tease out each portion of the mark; (2) approach confusion on the basis of first impression, from the perspective of the average person who goes into the market; and (3) use common sense.  The average consumer being the “‘ordinary harried purchaser’ – neither the ‘careful diligent purchaser’ nor the ‘moron in a hurry’”.  Justice Phelan held that the ordinary purchasers in this case were beer drinkers “sensitive to the names of beers and to what they know and like”.  The ordinary purchaser was not the “non-beer drinking life partner who is asked to pick up beer”.

In reversing the Board’s decision, the Court concluded that one look at the labels above, and common sense, was “sufficient to dispel any notion of confusion”.  The Court then went on to state that the Member did not consider that in refusing to register the RED HORSE trademark, Molson was effectively being granted a trademark monopoly over the word HORSE of any colour in relation to beer.  The breadth of that monopoly was found to be unreasonable.

It is clear that Justice Phelan looked at the marks as a whole, including the design element.  It is also of note that he focused on a beer-drinking consumer and not just an average consumer.  However, it is the concern about granting a monopoly that is most interesting.

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An Interplay of Canadian Official Marks and Canadian Trademarks

A February 2010 blog, “Professional Designations and Abbreviations, Acronyms and Initials” discussed the summary judgment and permanent injunction obtained by the College of Traditional Chinese Medicine Practitioners and Acupuncturists of British Columbia (“the College”) against the Council of Natural Medicine College of Canada (“the Council”) pursuant to which certain trademarks which the Council had registered, such D.C.T.M (DOCTOR OF TRADITIONAL CHINESE MEDICINE) and REGISTERED D.P.C.M, were expunged on the basis that the marks were clearly descriptive or deceptively misdescriptive (contrary to s.12(1)(b) of the Trade-Marks Act) and recognised in Canada as designating the services of doctors of Traditional Chinese Medicine and acupuncturists (and therefore contrary to s.10).  The Council was also enjoined from registering similar trademarks.  The Council appealed this decision, but subsequently discontinued the appeal.

The Council did, however, bring an application for judicial review asking the Federal Court to set aside the notice given by the Registrar of Trade-marks of the adoption and use by the College of various official marks, including D.C.T.M (DOCTOR OF TRADITIONAL CHINESE MEDICINE) and REGISTERED D.P.C.M.  Section 9(1)(n)iii) grants protection to “any public authority” in Canada that adopts and uses a mark and in respect of which the Registrar of Trade-marks has given notice.  In Council of Natural Medicine College of Canada v. College of Traditional Chinese Medicine Practitioners and Acupuncturists of British Columbia the Federal Court concluded that the official marks were valid and that section 9(1)(n)(iii) was constitutional.

As explained in the decision, the Council is a private non-profit company incorporated under federal legislation which created educational programs in traditional Chinese medicine.  The courses were offered by affiliated private schools.  Prior to the earlier Federal Court decision the Council also entered into trademark licence agreements with the graduates of its programs.  The College, however, had been established under the British Columbia Health Professions Act to regulate the practice of traditional Chinese medicine, including the titles that could be used by practitioners. 

On judicial review, the Council sought to establish that the College was not a public authority, that it had not “adopted” its official marks and that section 9(1)(n)(iii) was contrary to the division of powers scheme in the Constitution, as well as freedom of expression.  As explained by the Court, notice of an official mark means that others are prohibited from adopting, in association with a business, a mark that resembles the official mark and may be mistaken for it.  It is also not necessary for a public authority to demonstrate the distinctiveness of a proposed official mark or any secondary meaning, and there is no requirement that public notice be given of a request to the Registrar.  Following an earlier decision, Ontario Association of Architects v. Association of Architectural Technologists of Ontario the Court concluded that the College was a “public authority” given that the requisite governmental control was evident.  With regards to adoption and use, the court noted that these terms were broad in scope and for purposes of section 9,  a mark is adopted and used if it is displayed in association with services, even if the mark is not distinctive or clearly descriptive.  The marks at issue had been displayed on a publicly accessible website before the date of public notice and whether the College had displayed the marks merely to support its application to the Registrar was not relevant. 

With regards to the constitutional issues, the Court was not prepared to read down the provisions of the Trade-marks Act on the basis that provincial responsibility regarding the regulation of professions is infringed if the federal government is able to provide for the protection of official marks relevant to professions.  The Court was not convinced that provincial powers were in any way infringed and noted that the federal legislation, while it overlapped with provincial jurisdiction, reinforced the provincial powers, since self-governing professions, by obtaining official marks, were able to ensure that professional designations did not become articles of commerce.  Professional titles generally cannot be registered as trademarks, not because regulation of a profession is within provincial jurisdiction, but because they are descriptive or non-distinctive, tests that are not relevant when considering official marks.  With regards to freedom of expression, section 9(1)(n)(iii) infringed section 2(b) of the Charter, but it was justified as a reasonable limit prescribed by law given the College’s need to prevent confusion between government and private services and the need to prevent persons from capitalizing upon or misusing public symbols and marks.

 Thus, the private entity, the Council, was not entitled to trademarks such as D.C.T.M (DOCTOR OF TRADITIONAL CHINESE MEDICINE) and REGISTERED D.P.C.M, but the College is entitled to its official marks, thereby allowing the College greater control over the use of professional designations.

Significant Amendments to Canada’s Trade-marks Act Closer To Reality

Canada’s federal Government introduced Bill C-56 on March 1, 2013 – the Combating Counterfeit Products Act.   The primary focus of this Bill is to improve the ability of copyright and trade-mark owners to combat the manufacture, importation, sale and distribution of counterfeit goods in Canada. 

 While the primary focus of the Bill is on counterfeit goods, the Bill calls for amendments to both the Copyright Act and the Trade-marks Act that will have effects beyond counterfeiting. 

Should this Bill go through as is, the changes to the Trade-marks Act (the “Act”) include the following: 

-         “Wares” will become “goods” and the definition of a “distinguishing guise” will be repealed

-          “distinctive” in relation to a trademark will describe a trademark that actually distinguishes or that is inherently capable of distinguishing the goods and services of the trademark’s owner from those of others

-          The references to “mark(s)” throughout the Act will now be references to a “sign or combination of signs”

-          “sign” will include a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign

-          A trademark will not be registrable if its features are dictated primarily by a utilitarian function (codifying recent case law)

-          In order to make a priority filing date claim, an applicant will no longer be required to have a real and effective industrial or commercial establishment in the country where the first application to register the trademark was filed. 

-          A Counterstatement to a Statement of Opposition will only need to state that the applicant intends to respond to the opposition.

-          It will be made clear that the Trade-marks Opposition Board can, in applicable circumstances, refuse some goods/services and let the remainder of the goods/services through to Registration, when dealing with Opposition proceedings

-          Divisional applications will be permitted, as well as mergers of registrations that stem from an original application that was divided

-         Applications for proposed certification marks will be permitted

-          The Bill contains many provisions relating to offences arising out of manufacturing, sale, possession, importation, distribution, and the like of counterfeit goods, labels and packaging, with fines of up to $1,000,000 or imprisonment for up to 5 years, if convicted on indictment.  There are also a number of provisions dealing with detention and destruction of infringing goods

There are, unfortunately, a number of  other provisions in the Act that could have been modified, deleted or clarified, which this Bill does not currently deal with.  Time will tell what changes are made to this Bill as it proceeds through the legislative process, with input from various committees and special interest groups.

About the Blog

The authors of the Canadian Trademark Blog are all members of the Canadian law firm Clark Wilson LLP, based in Vancouver, Canada. Each author's practice focuses–either in whole or in substantial part–on Canadian intellectual property law. Together, they manage the trade-mark portfolios of local, national and international brand owners in nearly all industries and markets.

The Authors