Essential Elements for a Successful Section 22 Claim

Section 22 makes another statutory right available to the owner of a registered trademark in addition to the right to claim infringement. The section states that no person shall use a trademark registered by any person in a manner likely to depreciate the value of the goodwill attached to the trademark. The right can be useful, and it is often sought concurrently with a claim for infringement.

A claim under section 22 is subject to a discretionary power vested in the court to decline to order the recovery of damages or profits and permit the defendant to continue to sell goods marked with the trademark in issue in its possession or under its control when notice was given to it that the owner of the registered trademark complained of the use of the trademark. 

Goodwill and Depreciation

Goodwill consists of reputation and connection built up by years of work or gained through significant expenditure of money and which is identified with the goods distributed by the owner in association with the trademark. 

The value of the goodwill attached to a registered mark may be depreciated if any of the following occur:

(a) the esteem in which the goods or services are held is reduced,

(b) direct persuasion and enticing of customers who would otherwise be expected to buy or continue to buy goods bearing the trademark,

(c) disparagement of the mark, or

(d) the dilution of the distinctiveness or unique characteristics of a mark.

This list is not exhaustive. 

Evidence not Speculation

A mental association of the two marks does not necessarily give rise to a likelihood of depreciation. There must be evidence of a “likelihood” of depreciation. This is a matter of evidence, not speculation. If the parties carry on business in unrelated fields, there may be no depreciation of goodwill. 

The verb “use” in section 22 takes its meaning from the definition of the noun “use” in the Act. This means section 22 is limited to a use which any person may make, in association with goods or services within the meaning of the Act of another’s registered trademark, to depreciate the value of the goodwill attached thereto. 

The difference between the requirements for use in association with goods and services can lead to surprising results. For example, in a leading case it was found that the reproduction of the plaintiff’s trademark on the defendant’s packages was use within the meaning of section 22 but that the reproduction on the defendant’s brochures was not. 

Distinguishing Section 22 from Infringement Claims

Section 22 does not require the plaintiff to show that use of both marks in the same geographic area would likely lead to confusion. However, it requires the plaintiff to show that the defendant has used a mark sufficiently similar to the plaintiff’s mark to evoke in the relevant universe of consumers a mental association of the marks likely to depreciate the value of the goodwill attached to the plaintiff’s mark. The key is the likelihood of depreciating the value of the goodwill attached to a trademark.

The Essential Elements of a Successful Section 22 Claim

A claim under section 22 is different from a claim for infringement. To succeed with a claim under section 22, these elements must be shown:

(a) The plaintiff’s registered trademark or at least its distinguishing feature was used by the defendant in connection with goods or services, whether or not such goods or services compete with those of the claimant. 

(b) The plaintiff’s registered trademark is sufficiently well known to have significant goodwill attached to it. The mark need not be well known or famous, but goodwill must exist. 

(c) The plaintiff’s mark was used in a manner likely to have an effect on that goodwill, which is referred to as linkage. Linkage requires a mental association in the mind of a reasonable buyer between the two parties and the mark. The likelihood of this linkage is a matter of evidence, not speculation. 

(d) The likely effect would be to depreciate the value of the goodwill. Depreciation includes lowering the value of the goodwill and disparagement or tarnishing the trademark. 

In addition, a trademark’s value can be lowered when different users bandy it about or when their actions cause “blurring”, that is, whittling away the trademarks ability to distinguish the owner’s goods or services and attract consumers or “dilution” in lesser distinctiveness. 

In a decision involving Energizer Brands, LLC and the Gillette Company, Energizer Brands could not convince the Judge that the reference to the “Bunny brand” was enough to show depreciation of the plaintiff’s goodwill. A similar result was arrived at concerning “the next leading competitive brand” which was not an Energizer trademark, nor was it sufficiently similar to the Energizer trademarks to evoke one of them to a hurried consumer. The casual observer would not recognize the above phrases as a mark of Energizer, and without a “link, connection or mental association in the consumer’s mind” with an Energizer trademark, there was no depreciation. 

Later decisions have confirmed that section 22 addresses circumstances where a casual observer would recognize the mark used by the defendant as the mark of the claimant, as would be the case if Kleenex were spelled Klenex. 

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

John McKeown

Goldman Sloan Nash & Haber LLP

480 University Avenue, Suite 1700 

Toronto, Ontario MSG 1V2

Direct Line: (416) 597-3371

Fax: (416) 597-3370

This article is of general nature and is not intended to provide specific legal advice as individual situations will differ. Specialist advice should be sought about your specific circumstances. 

A version of this article originally appeared in the Law360 Canada published by LexisNexis Canada Inc.