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Be Careful When Presenting Evidence In A Trademark Opposition!

A recent decision of the Federal Court raises interesting issues concerning the evidence required to succeed in a trademark opposition. Caterpillar SE v. Puma SE 2021 FC 974.


The Facts

Puma SE filed application number 1,558,723 for the trademark PROCAT based on the proposed use of the trademark in Canada in association with “footwear, namely athletic, sports and casual shoes and boots; headgear, namely hats and caps.”

Caterpillar Inc. filed a Statement of Opposition asserting, among other things, that the PROCAT mark was confusing with its registered trademark CAT & Triangle Design, shown below, which was registered for use in association with footwear and headgear.








Both parties filed evidence, and the opposition proceeded to a hearing. Caterpillar relied on the use of its mark in Canada by its licensees under section 50 of the Trademarks Act. Subsection 50(1) provides that the use of a trademark by a licensee is deemed use of the mark by the owner, where the owner has, under licence, direct or indirect control of the character or quality of the licensed goods or services. Subsection 50(2) states that for the purposes of the Act, to the extent that public notice is given of the fact that the use of a trademark is a licensed use and of the identity of the owner, it shall be presumed, unless the contrary is proven, that the use is licensed by the owner of the trademark and the character or quality of the wares or services is under the control of the owner.


The Hearing Officer determined that Caterpillar did not have the requisite control to benefit from this deeming provision. The licensing arrangements Caterpillar had with two of its licensees focused on packaging and labelling of the goods manufactured rather than the character or quality of the goods sold in association with Caterpillar’s mark and showed a lack of direct control.


The Hearing Officer concluded there was no reasonable likelihood of confusion between Puma’s trademark PROCAT and Caterpillar’s mark.


The Appeal

Caterpillar appealed to the Federal Court. As it was their right to do so, both parties filed additional evidence. In this situation, the Court must consider whether the new evidence was material in the sense of having a material effect on the decision of the Hearing Officer had it been presented at that stage.


The Court concluded the new evidence was material, which meant that the appeal was de novo. In this case, the Court need not defer to the Hearing Officer’s reasoning process and can undertake its own analysis to decide whether it agreed with the Hearing Officer’s determinations or whether it should substitute its own views.


The Licence Issues

The Court found that the Hearing Officer had made palpable and overriding errors in assessing whether the licensed use of the CAT trademark in Canada by Caterpillar’s licensees enured to its benefit. The new affidavits filed on the appeal supported the conclusion that Caterpillar satisfied the requirements of both subsections 50(1) and 50(2) of the Act, and the licensees’ use enured to its benefit.


Whether the licensees are wholly-owned dealers does not determine whether the owner has direct or indirect control over the character or quality of the licensed goods. Nor is there a requirement under subsection 50(1) that the licensee gives public notice of the owner of the trademark; that is a requirement to satisfy subsection 50(2). The presumption of controlled licensing arises only if the owner chooses to provide publicly or to authorize the public provision of the specific information stipulated in subsection 50(2). The Act does not mandate, however, that such information must be provided; whether the owner provides the information is voluntary.


Whether a trademark owner has sufficient control for subsection 50(1) can be met in one of three alternative ways. The owner can: (i) attest that it exerts the requisite control (directly or indirectly); (ii) provide evidence demonstrating that it does so; or (iii) provide a copy of the licence agreement that explicitly provides for direct or indirect control of the character or quality of the licensed goods. Caterpillar’s initial evidence satisfied the first requirement, and their additional evidence satisfied the second and third requirements.


The Likelihood of Confusion

Subsection 6(2) of the Act provides that the use of a trademark causes confusion with another trademark if the use of both trademarks in the same area would likely lead to the inference that the goods associated with those trademarks are manufactured, sold, or leased, by the same person, whether or not the goods are of the same general class. The test to be applied was, as a matter of first impression, would a casual consumer, somewhat in a hurry, who saw a good bearing Puma’s trademark PROCAT, when that consumer first encounters such trademark in the marketplace, and where the consumer has no more than an imperfect recollection of Caterpillar’s trademark CAT & Triangle Design and does not pause to give the matter any detailed consideration or scrutiny, be likely to be confused as to the source of the goods?


Subsection 6(5) of the Act specifies the following factors need to be considered in the confusion analysis in reviewing “all the surrounding circumstances”:


(a) the inherent distinctiveness of the trademarks or trade names and the extent to which they have become known;


(b) the length of time the trademarks have been in use;


(c) the nature of the goods or business;


(d) the nature of the trade; and


(e) the degree of resemblance between the trademarks in appearance or sound or in the ideas suggested by them.


These factors are not exhaustive and may be weighed differently in a context-specific assessment. However, in an opposition, the onus is on Puma to demonstrate no likelihood of confusion on a balance of probabilities.


It is a long-standing tenet of trademark law in Canada that the first element of the trademark often is the most important for the purposes of distinguishing one mark from another. However, more recent decisions consider whether an aspect of the trademark is striking or unique. This approach recognizes that trademarks with some differences still may result in likely confusion.


The Court agreed with the Hearing Officer’s finding that the parties’ trademarks resemble each other in appearance and sound because of the shared component CAT. But the Court disagreed regarding the extent to which the element “pro” assisted in differentiating Puma’s mark from Caterpillar’s trademark CAT & Triangle Design. There was evidence that the prefix “pro” has a suggestive or laudatory connotation in association with Puma’s goods, which shifted the focus of the resemblance assessment to the more striking feature of the trademark, the suffix “cat.” Both the PROCAT mark and CAT & Triangle Design suggested a feline animal.


In addition, the Supreme Court of Canada had said that considering a trademark as a whole does not mean that a dominant component in a mark which would affect the overall impression of an average consumer should be ignored. Applying this approach, the Court found there was significant resemblance between the parties’ trademarks.


Another significant factor was the state of the register evidence. This consists of evidence showing the existence of preexisting trademarks containing similar elements. In theory, an element viewed as common in the marketplace may have little distinctiveness and cause consumers to pay greater attention to small differences or features between and among trademarks containing or comprised of that element.


Puma had filed evidence of 13 trademarks which the Hearing Office had accepted as enough on which to base an inference of marketplace use. The Court disagreed and said this number of trademarks was insufficient to draw any inferences about the state of the marketplace, especially absent any demonstrated marketplace use of those marks.


When the Court considered the statutory factors, including the new evidence of use filed by Caterpillar and the errors made by the Hearing Officer, the Court concluded that a likelihood of confusion between the parties’ trademarks had been established on a balance of probabilities.


Comment

This decision raises interesting issues relating to presenting evidence before the Trademark Opposition Board. First, an amendment was made to subsection 56(5) of the Act to require an appellant to seek leave from the Federal Court to adduce evidence in addition to that adduced before the Board. While the amendment was passed, it has not been brought into force. It remains to be seen the grounds under which leave will be granted. This situation suggests that caution be exercised since the rules may change.


Second, las in any other case, care must be taken to ensure that the “right” evidence is filed at the “right” time. While Caterpillar’s initial evidence may have been sufficient, it seems obvious it was less than persuasive until corrected on appeal.


Finally, critical thought must be given to filing state of the register evidence to satisfy the concerns raised.


If you have questions, please contact me at mckeown@gsnh.com.


John McKeown

Goldman Sloan Nash & Haber LLP

480 University Avenue, Suite 1600

Toronto, Ontario M5G 1V2

Direct Line: (416) 597-3371

Fax: (416) 597-3370


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.


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