Maintained by Clark Wilson LLP

A Tale of Two Trademark Appeals

In Clic International Inc. v. Convenience Food Industries (Private) Ltd., 2011 FC 1338, Clic International appealed a decision of the Registrar to expunge its trademark. The mark, which was used in association with the company’s line of canned fava beans, consisted of LAZIZA and an accompanying palm-tree design. Under s. 45 of the Trade-marks Act, a trademark may be expunged at the request of a third party if the owner cannot demonstrate use within the last three years. Here, Convenience Foods made the s. 45 request to the Registrar.

Before the Registrar, Clic attempted to show use of its trademark with evidence of the word LAZIZA on a can of fava beans. However, the Registrar noted that Clic had not used the accompanying palm tree logo (which was part of the trademark). The “evidence of modified use” did not constitute “use” for the purposes of s. 45, as far as the Registrar was concerned, and the trademark was expunged.

On appeal, Clic was entitled to provide new evidence and asserted that the change to its logo was within the scope of “cautious variations” that are allowed under current jurisprudence, citing, among other cases, Promafil Canada Ltee v. Munsingwear Inc, [1992] FCJ 611, which held that as long as the dominant features of a trademark are maintained and the differences are “so unimportant as not to mislead an unaware purchaser”, the use of the modified trademark should be enough to satisfy s. 45.

In response, Convenience Food pointed to Bierrsdorf AG v. Becton Dickinsons and Co., (1992), 44 CPR (3d) 151, where use of the word component and an altered design component were sufficient for s. 45, noting that Clic’s design component was done away with altogether.

The Court, agreed with Convenience Food, explaining that the logo being used was quite different than the registered trademark. Not only was there no palm-tree drawing, but LAZIZA was in a different font and was above an oval depicting some Arabic characters. This gave the whole mark quite a different look, which, according to the Court, departed from a “cautious variation”.

The Court was careful to refute Clic’s assertion that the trademark not be expunged because consumers still recognized the mark and associated it with Clic’s fava beans. This had no bearing on the issue of “use” for s. 45, and the correct consideration was whether the mark had been used in a substantially unchanged manner.

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In David M. Locke v. Osler, Hoskin & Harbourt LLP, 2011 FC 1390 the Registrar expunged a mark in the initial hearing, but the Court overturned that decision based on new evidence. Here, the Court did not have to consider a modified trademark. Rather the issue was much more straightforward; the trademark holder had not introduced any evidence at the initial hearing, but did on appeal.

The trademark in question here was SPORTSMAN’S CHOICE, which was used in association with a small, home-based sporting goods and pet accessories store. In the original s. 45 hearing, Locke did not put forth any evidence because he had not initially understood the nature of the claim, and only retained legal counsel just prior to the extinguishment of the trademark. The Federal Court held that a failure to adduce evidence during the underlying hearing was not a bar to introducing it on appeal. So, Locke was able to introduce evidence of his use of SPORTMAN’S CHOICE in the appeal, including labels affixed to pet food, labels on hunting clothes and gear, and tags on pet supplies.

In considering this evidence, the Court noted that the threshold for proving “use” is quite low, and a prima facie case of “use” is enough. Indeed, evidence of a single sale can suffice as long as it is not contrived for the purposes of the hearing.

Off to the Marché We Go! – Not Descriptive and Not Confusing

The Federal court recently dismissed an appeal to have a trademark expunged on grounds of descriptiveness and confusion. In Movenpick Holding AG v. Exxon Mobil Corporation and Attorney General of Canada (Registrar of Trade-marks), the Court considered whether Esso’s “Marché Express” mark is too descriptive of the services it provides as a gas-station convenience store. Then it went on to consider whether it was possible to confuse “Marché Express” with Movenpick’s “Marché” mark, which it uses for its chain of restaurants.

Movenpick claimed that “Marché Express” is descriptive of the services Esso offers. Section 12(1)(b) of the Trade-marks Act provides that a trade-mark must not be “clearly descriptive” of the character or quality of the wares or services associated with the mark. So, the question before the Court was whether, in the French language, “Marché Express” was descriptive of a convenience store.

Both sides produced expert evidence of the meaning of the phrase “Marché Express”. The Court was unimpressed with this, favouring evidence of the phrase’s colloquial use rather than academic musings as to its meaning. The Court noted that one must look at the perception of the phrase by regular everyday consumers, not its meaning as derived from a scholarly analysis.

The Court ultimately found that while the word “marché” is used to describe convenience stores (it translates strictly to “market”), the construction “Marché Express” is not something that regularly appears in colloquial French. At best, it could be construed to mean the result produced from shopping at a such a store. Thus, “Marché Express” is not “clearly descriptive”, contrary to s. 12(1)(b).

Movenpick also claimed that Esso’s mark, when used to denote a convenience store, was easily confused with its own registered trademark, “Marché”, which is used in association with the operation of Movenpick’s restaurant. Under s. 12(1)(d), a trade-mark is not registrable if it is confusing with another registered trade-mark.

The Court outlined the test for confusion from Veuve Cliquot Ponsardin v. Boutiques Cliquot Ltée, 2006 SCC 23, wherein the Court must look for confusion in the mind of a “casual consumer somewhat in a hurry” who only has an “imperfect recollection” of the other mark. The Court also carefully considered all of the surrounding circumstances dictated by s. 6(5) of the Act. Most interestingly, the Court agreed with the Registrar’s statement that “Marché” was a weak mark. The term “Marché” is commonly used in the food and beverage industry; thus, consumers are used to seeing it in the marketplace (no pun intended!). When a mark has such a broad usage, the trademark holder cannot expect to have a wide range of protection over the mark. Consumers are able to pick up on slight differences between such weak marks, so the sphere of protection is accordingly narrower. The Court held that the inclusion of “Express” was enough for casual consumers to distinguish the two marks in question.

So, in the end, Esso was able to keep the registration of its trade-mark, and decidedly un-confused consumers are still able to both shop at the Marché Express and dine at Marché restaurants.

Target Settlement

We are following up on a blog we posted in 2011 reporting that Target Brands Inc., the U.S. retailer, was refused an interlocutory injunction in its continuing battle with owner of the Canadian trade-mark registration for TARGET. 

The U.S. retailer has plans to open in Canada beginning in 2013.  However, the owner of the Canadian trade-mark registration, such ownership dating back to 2002,  had begun operating a series of stores in 2010 Canada.  The ongoing battle has been commented on frequently as an example of the importance of policing key trademarks in foreign jurisdictions.

The Globe and Mail is reporting on February 2, 2012 that a settlement has now been reached.  The details are not known, but it is suggested that the settlement may be worth millions of dollars to the Canadian owner, who must cease all use of the TARGET trademark by January 31, 2013.

Putting The Accent On .CA Domains

The Canadian Internet Registration Authority (CIRA) has released the results of its first consultation on its proposed implementation of .CA domains with French accent characters (known as the Latin Supplement -1 Unicode characters), such as é à ü and ç.  

Under its initial implementation plan, CIRA proposed a sunrise period during which owners of .CA domain owners could register as many French accented variants of their existing ASCII (non- accented Latin-based script characters, namely the letters a-z) domains as they opted for.  For example, the owner of grace.ca could also register grâce.ca during the sunrise period, before that accented variant of grace.ca (and all other French accent variants) would be opened up for registration to anyone else who otherwise qualifies to own a .CA domain.

As a result of comments received during the first consultation period, many citing concerns about increased costs to .CA domain owners, phishing and the potential for consumer confusion, CIRA is now proposing to do away with any sort of sunrise and landrush periods and instead is proposing that only the owner of a .CA domain name with ASCII characters would have the right to register any or all French accented versions of that .CA domain. In addition, under the new proposal, once a French accented .CA domain name variant has been registered, it cannot be transferred without also transferring the ASCII .CA domain name and all other registered French accented .CA domain name variants.  CIRA refers to this concept as “character bundling”.   In addition, CIRA is also considering the feasibility of some additional French accent characters that are commonly used.

CIRA is seeking input and comments on its revised implementation plan, during a second consultation period, running from January 24 to February 24, 2012.

Trademark Expungement Proceedings: Standing as a “Person Interested”

In McCallum Industries Ltd. v. HJ Heinz Co. Australia Ltd., the Federal Court dismissed the applicant’s action to expunge the respondent’s trademark under s. 57(1) of the Trade-marks Act.

Both the applicant and the respondent produced canned and processed meat products in Canada, the applicant under the name “PALM & Device“, and the respondent under the name “OX & PALM”. The applicant was granted a trademark in July 2003, while the respondent was granted a trademark in October 2005.

Section 57(1) allows “any person interested” to apply to the Federal Court for an order that any entry in the register be struck out or amended on the grounds that at the date of the application the entry as it appears on the register does not accurately express or define the existing rights of the person appearing to be the registered owner of the trademark. The applicant sought expungement of the respondent’s trademark on the grounds that the trademark was confusing to the public, that the respondent was not the person entitled to secure registration of the trademark, and that the trademark was non-distinctive. Read more

Trademark Interlocutory Injunction Denied to Target

In Target Brands Inc. v. Fairweather Ltd., the Federal Court of Canada refused to grant the interlocutory injunction sought by the American retail chain, this recent application being part of a continuing battle.

In 2002, Target’s counsel initiated proceedings under s. 45 of the Trade-Marks Act to cancel INC’s trade-mark registration for TARGET APPAREL. The Registrar of Trade-marks issued a notice on April 2002 requiring INC to show use of the trade-mark registration in Canada. INC filed an affidavit on its use of the trade-mark in response to the s. 45 notice. The Registrar of Trade-marks held that the evidence was insufficient to show use. INC appealed the Registrar’s decision and the Federal Court reversed that decision on October 19, 2006. Target’s counsel appealed to the Federal Court of Appeal, which affirmed the Federal Court decision on November 26, 2007.

Target claimed that they only became aware of INC’s use of TARGET APPAREL as a store name in June 2010. Its counsel sent a letter to INC objecting to the use of the TARGET trade name on August 3, 2010. Again, Target commenced a s. 45 proceeding to cancel the trade-mark registration of TARGET APPAREL. The Registrar of Trade-marks has issued another notice to INC under s. 45 of the Trade-marks Act on July 30, 2010, and the proceeding is currently underway.

Target also requested an injunction for the months leading up to the trade-mark dispute trial, scheduled to begin in November 2012.

The Court set out and applied the three-step test for applications for interlocutory injunctions. Although the Court found the first requirement of a serious question to be tried had been met, the question of irreparable harm to the Plaintiff was answered in the negative.
The Court found the Plaintiff’s submission on irreparable harm, advanced on the basis of a marketing theory about “sincere” and “exciting” brand personalities, difficult to assess. The Court noted, where expert evidence is provided by affidavit and is challenged in the course of the proceedings, the assessment of such expert evidence is best left for the fullness of a trial where review of qualifications and in-court testimony, direct, cross-examination and redirect, are present.

In deciding the question of irreparable harm, the Court held that the level of confusion among prospective customers to be a matter of debate, the expert opinions required closer examination and assessment, and the time to trial was relatively short. Resultantly, Target had not proved on balance of probabilities that it would suffer irreparable harm during the intervening months until a decision is rendered at trial.

The Court further considered the issue of the balance of convenience and determined that the balance favoured INC. In looking back upon the chain of events, the Court noted that INC did not begin expansion with the Target Apparel stores until after the Federal Court of Appeal decision in its favour. At that point, Target had not yet announced its expansion into Canada. The Court held that INC’s decision was not the sort of risk that should be met with the Court’s disapproval. They had taken precautionary steps in the face of Target’s claims: they had inscribed a red maple leaf in a circle rather than using a red bull’s-eye; posted a disclaimer to the effect that it is not Target; and undertaken to maintain records of sales while the litigation is continued. 

No evidence was presented to suggest that Target would be prevented or delayed from opening Target stores in Canada, but the granting of the requested injunction would result in INC having to remove and replace its signage for all stores. Such removal and replacement would not only be costly, but may also suggest instability to INC’s customers, having significant consequences for the company. Consequently, the balance of inconvenience, as it was described by the Court, lay with INC rather than Target. Presumably the matter will now proceed toward trial in November 2012.

Counterfeit Goods: Significant Statutory and Punitive Damages

We have been following the line of cases dealing with counterfeit goods and the resulting damage awards, and note the most recent case from the Federal Court makes clear that a tougher approach to trademark  and copyright infringement can now be expected in Canada.  In Louis Vuitton Malletier S.A. v. Singga Enterprises (Canada) Inc., the Court awarded significant damage awards as well as punitive damages against the three defendant companies and their principals.

The Plaintiffs, Louis Vuitton and Burberry, hired a number of investigators to attend the stores and warehouses of the defendants Singga Enterprises Canada, Altec Productions and Guo (doing business as Carnation Fashion Company), as well as purchase items from their websites. While in attendance at the stores and warehouses, the investigators were shown and purchased a number of counterfeit items including handbags, sunglasses and jewellery, all of which contained unauthorized productions of the Louis Vuitton and Burberry trade-marks. The Plaintiffs were successful in showing that the defendants’ activities of manufacturing, importing, distributing, offering for sale and actual sale of bulk quantities of counterfeit and/or infringing items had been ongoing and, in the case of one of the defendants, had continued after the commencement of the proceeding and the motion for summary trial brought by the Plaintiffs.

The Court noted that none of the defendants, with the exception of the defendant Guo, had filed any materials in response to the motion or attempted to cross-examine any of the Plaintiffs’ affiants on their affidavits. Additionally, none of the defendants, again with the exception of Guo, had attended the hearing of the matter.

Following cases such as Louis Vuitton Malletier S.A. v. Lin Pi-Chu Yang and Louis Vuitton Malletier S.A. et al v. 486353 B.C. Ltd., the Court took a tough stance toward the defendants.  Noting the defendants’ knowing and wilful behaviours, the Court awarded damages for trade-mark infringement of $30,000 for each instance of infringement against the Singga defendants and defendant Guo. Resultantly, the Singga defendants were found liable for a total of $300,000 to the Louis Vuitton Plaintiffs and $180,000 to the Burberry Plaintiffs, and the Guo defendant was required to pay $180,000 to the Louis Vuitton Plaintiffs and $120,000 to the Burberry Plaintiffs.

With regard to the Altec defendants, the evidence showed a high level of importation and inventory turn-over and was held to warrant an award of damages on a turn-over basis rather than simply a per instance basis of infringement. The Altec defendants were required to pay $480,000 in damages to the Louis Vuitton Plaintiffs, and $480,000 to the Burberry Plaintiffs. Additionally, the Singga and Altec defendants were found jointly and severally liable for the activities of the Altec defendants, for which the Singga defendants received a commission, and were required to pay $60,000 to the Louis Vuitton Plaintiffs and $60,000 to the Burberry Plaintiffs.

In addition to the damages awarded for the defendants’ infringement of the Trade-marks Act, Louis Vuitton was found to be entitled to recovery of damages and profits, pursuant to the Copyright Act, in relation to infringement by each of the groups of defendants. Statutory damages for copyright infringement were awarded at the high end of the scale due to the defendants’ bad faith conduct, which was found to be dismissive of law and order, and demonstrating a necessity for deterring future infringements. The Court awarded a total of $40,000 per group of defendants.

Additionally, the Court found that the Plaintiffs were entitled to punitive and exemplary damages as against each of the defendants. Following the earlier cases referenced above, which held that punitive and exemplary damages may be awarded where a defendant’s conduct is “outrageous” or “highly reprehensible” and with little regard for the legal process, the Court awarded punitive and exemplary damages against each of the defendants. The Louis Vuitton Plaintiffs were awarded $200,000 against the Singga defendants, $250,000 against the Altec defendants, and $50,000 payable by the defendant Guo.

Finally, citing the Louis Vuitton cases mentioned above, the Court awarded solicitor and client costs due to the defendants “disrespectful disregard” for the process of the Court, and the higher legal fees and disbursements incurred by the Plaintiffs as a result.

An appeal has now been filed by the Singga defendants, which means that there may eventually be a Federal Court of Appeal decision regarding the awards. We will continue to follow this story.