February is the month Canadians look to for signs winter may come to an early end. It’s also the month when trademark practitioners around the world eagerly await Brand Finance’s Global 500 report. With an impressive 42% increase in brand value, AMAZON jumped from 3rd spot last year, to take the lead this year. Staying steady at number 2 was APPLE, seeing a 37% increase in brand value. The former leader, GOOGLE, now comes in 3rd, with a relatively modest 10% increase in brand value (it’s affiliated YOUTUBE brand, however, saw a 114% increase, vaulting from number 112 to 42!). While there was movement within the top ten brands, as a group these remained the same as last year, highlighting the staying power of already dominant brands. The top brands remained principally tech-focused and for the first time since the Global 500 study began, the top 5 were all technology brands. Rounding out the top ten in 2018 were SAMSUNG, FACEBOOK, AT&T, MICROSOFT, VERIZON, WALMART and ICBC. As is evident, United States-based brands dominated, but Chinese brands continue to make strong gains: in 2008 they accounted for a mere 3% of the total brand value (lagging far behind other countries), and in 2018 they account for 15%, coming in second to the United States (48% in 2008 to 43% today). According to the report, the strongest brand of the year was DISNEY (ranking 31 overall in value), while the top Canadian brand by value was RBC at number 107.
Federal Court of Appeal considers “special circumstances” in appeal of trade-mark expungement
In a recent decision of the Federal Court of Appeal (“FCA”), the FCA took the rare opportunity to consider an appeal from a section 45 expungement proceeding. In One Group LLC v Gouverneur Inc, the FCA reviewed the Registrar’s decision not to expunge One Group LLC’s (“One Group”) trade-mark registration for STK (the “Mark”) on the basis of non-use, as well as the subsequent Federal Court (“FC”) decision to overturn the Registrar’s ruling.
One Group operates high end restaurants using the Mark outside of Canada. In preparation for a new restaurant in Toronto, One Group registered the Mark in Canada. However, due to failed discussions with hotels and developers, a Toronto restaurant never materialized.
In due course, Gouverneur Inc. (“Gouverneur”) brought a section 45 proceeding, alleging that One Group failed to use the Mark in the three preceding years. The Registrar refused to expunge the Mark on the basis that there were special circumstances that excused the non-use, namely that the non-use was not in the control of One Group, and that there was evidence that One Group was close to coming to an agreement with a hotel chain which would see the Mark used in Canada.
Gouverneur appealed to the FC on the basis that the Registrar misunderstood or misapplied the test for special circumstances. The FC agreed and overturned the decision of the Registrar on the basis that it was not a reasonable finding that special circumstances excused the non-use of the Mark, and ordered the Mark expunged.
One Group then appealed to the FCA. In a relatively brief decision, the FCA allowed the appeal and reinstated the ruling of the Registrar.
This decision highlights a number of points:
- First, the FCA emphasized that deference must be given to the Registrar in expungement proceedings, as well as in those instances where the Registrar is applying its “home statute”. As a result, courts should not disturb the Registrar’s findings of fact except in those circumstances where such findings are clearly not correct.
- Second, it appears that there is a general willingness of the Registrar to preserve registrations. Hence, to the extent the Registrar makes factual findings in support of preserving a registration, the court’s deference to those findings on an appeal presents a potentially difficult hurdle to overcome.
- Third, this case is a reminder that there is a “special circumstances” exception to non-use which can be used to preserve registrations. The criteria for determining if “special circumstances” exist are:
– the length of time during which the trade-mark has not been used;
– whether the reasons for non-use were beyond the registered owner’s control; and
– whether the registered owner has a serious intention to shortly resume use of the trade-mark.
Whether special circumstances exist will be determined by the Registrar from the evidence. Such findings, as stated above, will be given deference by the courts.
With this deference in mind, the FCA found no error in the Registrar’s decision that justified judicial intervention, and restored the decision of the Registrar.
Location Matters: The Perils of Geographic Names as Trade-marks
When choosing a trade or business name it may seem like a good idea to incorporate the location of your business into the name. There are benefits: it is helpful for marketing, it gives your audience an idea of where your business is and who your market is, it can help establish your business in a neighborhood, and it can help you build a brand based on community and locality.
However, using the location of your business in your trade or business name can cause difficulties when it comes to registering that name as a trade-mark. Under section 12(1) (b) of the Trade-marks Act, a trade-mark is not registerable if it is clearly descriptive or deceptively misdescriptive of the place of origin of the goods or services with which the trade-mark is used, unless that trade-mark has acquired distinctiveness through its use.
The Federal Court of Appeal recently reviewed section 12(1)(b), and considered the issue of whether a service provider can register, as a trade-mark, the name of a geographic location, purely in relation to its services.
In 2012, a dental practice owned by Dr. Cragg applied to register the trade-mark OCEAN PARK (the “Mark”) in association with dental services based on use since as early as 2000. The Mark was registered for use in association with “dental clinics” in 2013.
Prior to Dr. Cragg applying to register the Mark, another dentist, Dr. Lum purchased an existing dental practice a block away from Dr. Cragg’s and changed the name of the practice to “Ocean Park Dental Group”. Then, after moving the practice, Dr. Lum changed the name to “Ocean Park Village Dental”, and advertised and displayed signage using the trade-name “Village Dental in Ocean Park”.
In early 2014 Dr. Cragg brought an action against Dr. Lum for infringement of the Mark. In response, Dr. Lum brought an action seeking to invalidate the Mark on the grounds that it was not registerable under section 12(1)(b) of the Trade-marks Act.
In the court below, the trial judge held that in order to prove that a trade-mark is not registerable under section 12(1)(b), a plaintiff has to show (1) that a trade-mark refers to a geographic location; and (2) that the location was indigenous to the services in question. Under this analysis, in order for the Mark to be non-registerable, a reasonable person would have equate the geographic location “Ocean Park” with dental services. Based on the evidence, the trial judge found that this was not the case, and the court dismissed the action to invalidate the Mark.
However, the Court of Appeal held that this was not the correct analysis. Instead, the analysis under section 12(1)(b) is to focus on:
– the type of services involved;
– the average consumers to whom the services are offered; and
– the character of the geographic location.
Under this analysis, if the trade-mark is the name of the geographic location where the services or goods are provided, then the trade-mark is descriptive within the meaning of 12(1)(b) and non-registerable because the trade-mark is descriptive of the origin of the services or goods.
The Court of Appeal reminded us that the reason why trade-marks that are descriptive of geographic locations are not registerable or protectable is to prevent a single service provider from monopolizing the name of a geographic location, so as to prevent other service providers from using that name to describe their own services.
On the issue of acquired distinctiveness, the problem identified by the Court of Appeal was that while geographic locations can be used in business names and for other purposes, they often do not meet the key requirement of a registerable trade-mark: distinctiveness. In this case, the Mark as registered, OCEAN PARK, was never used by itself in association with dental services. It was always used in the context of the name Ocean Park Dental. In this case, upon hearing “Ocean Park”, consumers would not think about Dr. Cragg’s dental services; as such, it could not be said that the Mark had acquired distinctiveness. Therefore, the Mark was declared invalid and struck from the Trade-mark Register.
This case warns businesses to be careful when choosing geographic locations as business or trade names which they may wish to register as a trade-mark. The use of a geographic location within the context of a broader trade-mark may be permissible. However, it is unlikely that a business can expect to register a trade-mark consisting purely of a geographic location, unless that business and the trade-mark have acquired significant distinctiveness through lengthy and extensive advertising and use.