LIVE is dead in the water – The Federal Court tackles another thorny trademark use decision

In a recent Federal Court Trial Division decision, the Court found that the trademark registration for LIVE, registered in association with, among other things, hotel, entertainment and advertising services, should be expunged for non-use during the relevant three year period.  The Court reviewed a number of conflicting decisions on the use of marks in Canada, where the primary service is performed outside of Canada – for example, the relevant hotel or entertainment establishment is physically located outside Canada – but some ancillary or related aspect of the services could be said to be performed in Canada – for example reservations for the hotel or for tickets to the entertainment venue could be made by Canadians while physically located in Canada.

The Court reiterated that in order for there to be use of a mark in Canada, it is essential that some aspect of the services must be offered directly to Canadians or performed in Canada and that it must be demonstrated that people in Canada obtained “some tangible, meaningful, benefit” from the use of the Mark in association with the registered service.  In expunging the registration, the Court found that “simply holding a reservation for a hotel in the US is not a tangible and meaningful benefit enjoyed in Canada, despite that it may ensure that a room will be available upon arrival.  The tangible benefit occurs only once the person leaves Canada and travels to the US and fulfills the reservation.”  A similar conclusion was arrived at in relation to entertainment services.

.

No Hotel in Canada? No Problem – Trademark Owner Maintains Trademark Registration With Hotel Services

The Federal Court of Canada (the “Court”) recently released its decision in Hilton Worldwide Holdings LLP v Miller Thomson, 2018 FC 895. In the decision underlying this appeal, the Registrar expunged the Canadian trademark registration for WALDORF-ASTORIA, owned Hilton Worldwide Holdings LLP (“Hilton”), on the basis of non-use. The Court allowed the appeal, and found that Hilton had proven the requisite use of its trademark in Canada, notwithstanding the fact that it did not operate a physical hotel in Canada.

Under the Canadian Trade-marks Act (the “Act”) a trademark is deemed to be used in association with services if it is “used or displayed in the performance or advertising of those services.” Courts have found that this statutory provision includes a condition that the services themselves must be performed or delivered inside Canada, and the mere advertisement of services in Canada does not constitute use within the meaning of the Act.

For trademarks associated with hotels, the Registrar has interpreted this condition restrictively. The Registrar has issued a number of recent decisions which found that the operation of a “bricks and mortar” hotel in Canada is necessary to establish the use of a trademark for “hotel” or “hotel services” in Canada (see, for instance, Bellagio Limousines v Mirage Resorts Inc, 2012 TMOB 220; Stikeman Elliot LLP v Millennium & Copthorne International Limited, 2017 TMOB 34; and Ridout & Maybee LLP v Sfera 39-E Corp, 2017 TMOB 149).

In contrast to the Registrar’s decisions involving “hotel services”, the Court has increasingly recognized circumstances in which companies operating outside of Canada can establish use of their trademarks in association with services directed to consumers in Canada. In HomeAway.com v Hrdlicka, 2012 FC 1467, the Court held that the appearance of a trademark on a computer screen via a website accessed in Canada, regardless of where the information may have originated from or is stored, constitutes use and advertising of the mark in Canada. The evidence in HomeAway.com also showed that people in Canada used the service at issue to post available rental properties located in Canada, and that these postings were available online to customers in Canada.

In allowing the appeal brought by Hilton, the Court focused on the ordinary understanding of the term “hotel services”, which would include ancillary services, such as reservation and booking services. Because these ancillary services would be included in “hotel services”, the Court found the Registrar erred in equating these services with “the operation of a hotel” – services which can only be performed at a physical hotel location. The ancillary services, in contrast, go beyond the physical “bricks and mortar” hotel, and the evidence showed that Hilton had performed such services in Canada, despite operating a physical hotel in another country.

Moreover, the type of hotel services which can be delivered online had greatly expanded since Hilton’s registration issued. The scope of the registration, according to the Court, must be considered in light of the development in online commerce as it relates to the ordinary commercial understanding of “hotel services.” Technological developments which occurred post-registration meant that Hilton could provide services online to Canadians who benefited from them. This also supported Hilton’s claim that it used the mark in Canada.

The decision forms part of a growing trend of Canadian trademark decisions which recognize that companies based entirely outside of Canada can offer services in Canada, and that the performance of those services will constitute use in Canada of the trademarks associated with such services.

David Bowden