A Clear Case for Expungement
Many applications in the Federal Court seeking expungement are relatively complex, but a recent application seems relatively straightforward and illustrates the application of the relevant principles. Advanced Purification Engineering Corporation (APEC Water Systems) v. iSpring Water Systems, LLC 2022 FC 388.
The Applicant is a California corporation which manufactures and sells water treatment systems. The Applicant has sold reverse osmosis drinking water filtration systems under the business name “APEC Water Systems” for over 20 years. Canadian customers can purchase products directly from the Applicant’s website and through Amazon. The first sale of the Applicant’s systems in Canada was made in January 2005. The Applicant applied to register its APEC trademarks in Canada in November of 2019 and learned that the trademark APEC WATER had been registered by its competitor, the Respondent.
The Respondent is incorporated in Georgia and sells reverse osmosis water filtration systems in association with a trademark very different from the Applicant’s mark. On April 23, 2015, the Respondent applied to register the trademark APEC WATER for use in association with water treatment devices and systems.
The Applicant brought an application under section 57 of the Trademarks Act to expunge the registration obtained by the Respondent. The first ground of the attack was that the Respondent was not the person entitled to secure the registration. Section 16 of the Act provides that a party is entitled to register a trademark unless the mark was confusing with a trademark previously used in Canada. The date for this assessment is the filing date of the Respondent’s application for registration or the date of first use of the trademark in Canada, whichever is earlier.
The Respondent’s application claimed a date of first use in Canada of August 4, 2012. As of this date, there was a strong likelihood of confusion between the respective marks since they were essentially the same, including the same goods, and the parties were competitors. The respondent was not entitled to register the mark.
The second ground of attack was that the trademark was not distinctive at the time proceedings bringing the validity of the registration into question were commenced. Under the Act, the term “distinctive,” in relation to a trademark, describes a trademark that actually distinguishes the goods or services in association with which it is used by its owner from the goods or services of others. Distinctiveness is a question of fact, and a trademark must satisfy the following three conditions to be distinctive: (i) the mark and the goods/services are associated or linked; (ii) the owner use this association in manufacturing and selling its goods/services; and (iii) this association enables the owner to distinguish its goods/services from those of others.
The Respondent’s trademark was not distinctive. It did not distinguish the Respondent’s goods and services from the Applicant’s goods and services since it was confusing. In addition, the Respondent filed no evidence of its use of the mark.
The third ground of attack was that the registration was invalid since the application was filed in bad faith. It seems likely that the Respondent applied to block the Applicant. The judge said, at best there was wilful blindness as to whether it had the right to do so given its likely knowledge of its competitor’s business. Such willful blindness did not meet the high threshold to establish bad faith.
The final ground was that the Respondent’s application included a material misstatement and was void from the date of its filing. Since there was no evidence of use of the mark, the date of first use claimed in the application was false and was a material misstatement.
Based on these findings, the registration was expunged.
The application was commenced within three years of the registration, but the proceeding was not resolved until March 2022. If the Applicant waited for the expiration of three years from the date of the registration, it could have instituted summary proceedings for expungement under section 45 of the Act. Summary proceedings are significantly cheaper than proceedings in the Federal Court particularly if the respondent in the section 45 proceedings does not file evidence.
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared in the Lawyer’s Daily, published by LexisNexis Canada Inc.