Key Trademark Decisions in 2021
2021 has again been a difficult year for trademark owners and their advisors. The pandemic has tested us all in profound and unexpected ways particularly with the arrival of the omicron variant for the holidays. We also continue to face unacceptably long processing delays and waits for hearing dates in the Trademarks Office.
Despite these impediments, there have been several important decisions in the last year. The decisions have considered the standard of review from decisions of the Trademark Opposition Board, the scope of protection for descriptive marks, distinctiveness, the statutory claims for passing off, appeals in 45 proceedings, confusion and expensive goods or services, survey evidence, delay in expungement proceedings, bad faith, evidence of meaning, the effect of expungement and trademark use. If I previously commented on a decision, a link has been added.
An Appeal de Novo
In Brandstorm, Inc. v. Naturally Splendid Enterprises Ltd. 2021 FC 73, Brandstorm failed in its opposition because it provided insufficient evidence of prior use of its mark to establish non-entitlement. Brandstorm appealed to the Federal Court and filed new evidence to show how its mark had been used in Canada. Subsection 56(5) of the Trademarks Act permits the parties to appeal to file new evidence. Where a party does so, and the new evidence is “sufficiently substantial and significant,” the Court may exercise any discretion vested in the Registrar and the appeal becomes an appeal de novo to which the correctness standard of review applies. Here the Judge proceeded on a de novo basis to determine whether the Hearing Officer was correct without deference to the Hearing Officer’s findings. The Judge accepted the new evidence, the appeal was allowed, and the opponent succeeded with its opposition.
An amendment has been made to subsection 56(5) to require an appellant to seek leave from the court to adduce evidence in addition to that adduced before the Board. However, the amendment has not been brought into force. It also remains to be seen what grounds will justify granting leave. Parties involved in opposition proceedings should carefully monitor this issue. https://www.gsnh.com/an-opponent-needs-to-carefully-consider-the-evidence-to-be-filed-with-the-trademark-opposition-board/
Scope of Protection for Descriptive Marks
In Hidden Bench Vineyards & Winery Inc. v Locust Lane Estate Winery Corp. 2021 FC 156, 181 C.P.R (4th) 171, the parties operated wineries on adjacent properties located on Locust Lane, in Beamsville, Ontario. The applicant claimed rights in the unregistered mark LOCUST LANE and brought an application for statutory passing off.
For marks that are descriptive in nature, it must be shown that the descriptive word has acquired distinctiveness or a secondary meaning to make it distinctive of its owner’s goods or services. This is described as a heavy onus that requires that evidence be presented to demonstrate that from the perspective of the relevant public — that is, people who actually use the product or service in question — the trademark has become distinctive of that product or service. Evidence of prior use by itself will not satisfy this requirement.
When the Judge reviewed the evidence, he concluded that it could not satisfy the heavy onus on the applicant. The Judge rejected as insufficient the applicant’s evidence on other factors such as length of use, the volume of sales, and extent and duration of advertising and marketing. Since the passing off claim relied on an unregistered descriptive mark, the applicant’s failure to show acquired distinctiveness resulted in an inability to establish the goodwill necessary to succeed with its claim. The Difficulties with Descriptive Trademarks (johnmckeownblog.com)
Low Inherent Distinctiveness
In Smart Cloud Inc. v. International Business Machines Incorporation 2021 FC 236 an appeal from a dismissal of an opposition dealt with entitlement to the trademark SMARTCLOUD and the lack of inherent distinctiveness of the mark. The Hearing Officer said that Smart Cloud’s trademark and tradename consisted of two ordinary dictionary words. As Smart Cloud’s services were essentially cloud computing services, its trademark and tradename were highly suggestive, possessing a low degree of inherent distinctiveness. It was well-established that a mark with low inherent distinctiveness or weak mark, is not entitled to a wide ambit of protection and that comparatively small differences will distinguish one weak mark from another. As Smart Cloud had not shown extensive use of its trademark and tradename, the low distinctiveness of the SMARTCLOUD mark had not been enhanced. The opposition was dismissed.
On appeal, the Court agreed on a review de novo based on the parties’ admissible new evidence. The new evidence led the judge to conclude that the two words comprising Smart Cloud’s trademark and tradename SMARTCLOUD were words in common usage and were understood by the casual Canadian consumer of computer goods and related services at the relevant dates. The appeal was dismissed. The Trials and Tribulations of Weak Trademarks (johnmckeownblog.com)
Attacking the Distinctiveness of a Mark
In Boulangerie Vachon Inc. v. Racioppo 2021 FC 308, 184 C.P.R. (4th) 183 applicant overcame an attack on its mark based on an alleged lack of distinctiveness and was successful in establishing infringement.
When the distinctiveness of a mark is involved, it is prudent to present marketplace evidence on a consumer level to show the mark is not distinctive. Similar considerations apply to the state of the register evidence. The defendant failed to do this and its attack on the mark was dismissed. Do Not Be Overly Optimistic or Aggressive When Attempting to Obtain a Trademark Registration (johnmckeownblog.com)
Dealing with a Pending Application Relied on by an Opponent
In Schneider Electric Industries SAS v. Spectrum Brands, Inc. 2021 FC 518, 185 C.P.R. (4th) 36 the court clarified that where an opponent’s application matures to registration after a statement of opposition has been filed, the statement of opposition should be amended to refer to the registration and to add an appropriate reference to subsection 12 (1) (d) otherwise the opponent will be precluded from relying on this ground.
The Statutory Cause of Action for Passing Off
In Sadhu Singh Hamdard Trust v. Navsun Holdings Ltd 2021 FC 602, 184 C.P.R. (4th) 331 the court reviewed the application of the statutory cause of action for passing off under subsection 7(b) of the Trademarks Act. Because of jurisdictional issues specific to the Federal Court, such a claim must be in relation to a registered or unregistered trademark. What is a Statutory Claim for Passing Off? (johnmckeownblog.com)
In Ark Innovation Technology Inc. v. Matidor Technologies Inc. 2021 FC 1336 the defendant prepared marketing materials for its Matidor software that were copies of plaintiff’s promotional materials with the plaintiff’s “ARKIT” name and logo replaced by the name and logo of Matidor. The plaintiff succeeded in establishing a claim for statutory passing off. The plaintiff established possession of a valid and enforceable unregistered trademark. The Judge was satisfied that the plaintiff had established goodwill in the “Arkit” name. This was confirmed by the defendant’s actions which created the impression that their business was associated with the plaintiff. The misrepresentations consisted of the defendant’s use of the Arkit marketing materials with the ARKIT trademark and logo replaced by the Matidor name and logo; their use of Ark’s Twitter account, which displayed the ARKIT trademark; and oral and written statements to the effect that the Matidor name and software was a “rebrand” of Arkit. The Judge concluded these actions caused loss of control over reputation, image or goodwill sufficient to satisfy the third element of the test for passing off.
Appeal from a section 45 Determination
In International Name Plate Supplies Limited v. Marks & Clerk Canada 2021 FC 611 the court said that on an appeal from a section 45 determination that the mark was not in use, a party’s failure to file further evidence to address factual deficiencies identified by the Hearing Officer may support the inference that the trademark was not in use, either during the period leading up to the s 45 notice or subsequently. The onus is on the registrant to establish, in a clear and unambiguous way, that the statutory requirements of section 4 of the Act have been met.
In Beverly Hills Jewellers Mfg Ltd. v. Corona Jewellery Company Ltd 2021 FC 673 the court applied the comments of Justice Rothstein, speaking for the Supreme Court of Canada, in the Masterpiece decision (2011 SCC 27 at para 67), that although consumers in the market for expensive goods may be less likely to be confused, the test is still one of “first impression”. In addition, the court considered the application of the current standard of review of decisions of the Trademarks Opposition Board. The standard for questions of law, including questions of statutory interpretation and those concerning a decision maker’s authority, is the standard of correctness. Where the statutory appeal includes questions of fact, the appellate standard of review for those questions is a palpable and overriding error (as it is for questions of mixed fact and law where the legal principle is not readily extricable).
In Tokai of Canada Ltd v. The Kingsford Products Company, Inc. 2021 FC 782, 184 C.P.R. (4th) 83 survey evidence was excluded because it was found there were deficiencies in the way it was carried out. Internet Survey Ruled Inadmissible (johnmckeownblog.com)
Delay in Expungement Proceedings
In Norsteel Building Systems Ltd v. Toti Holdings Inc. 2021 FC 927 it was accepted that acquiescence and delay in bringing an application to expunge in that court can be asserted as an equitable defence. To succeed the following four criteria must be established:
Something more than mere delay is required. Silence alone cannot bar a proceeding;
the rights holder must know of its right and must know of the other party's breach of that right;
the rights holder must encourage the other party to continue the breach; and
the other party must act to its detriment in reliance upon the encouragement by the rights holder.
It was also said that a failure to make obvious enquiries, which was willful blindness, did not amount to bad faith. The Latest Word on Bad Faith (johnmckeownblog.com) The Effect of Prior Use on Registered Trademark (johnmckeownblog.com)
Evidence of Meaning in an Opposition
In Caterpillar Inc. v. Puma SE 2021 FC 974 the court confirmed that while the Trademarks Opposition Board may take judicial notice of dictionary definitions of words found in trademarks, it may not take judicial notice of the meaning of such a word without evidence. As a result, an affidavit appending dictionary definitions should be filed. Be Careful When Presenting Evidence In A Trademark Opposition! (johnmckeownblog.com)
Effect of Expungement
In Wenger SA v. Travelway Group International Inc., 2019 FC 1104 affirmed Group II International Ltd. v. Travelway Group International Ltd. 2020 FCA 210, an application to seek to leave to appeal to the Supreme Court of Canada was dismissed (docket 39576) September 29, 2021. This confirms that when a registration is expunged by the court, it will be difficult for a party to seek damages or other relief because of the use of the expunged mark since unless it is shown that the registration was void ab initio, the owner of the expunged mark is entitled to the statutory right to use the mark under section 19 until the date of expungement. Under the amended Act a registration will be void ab initio only if the registration was obtained based on fraud or intent to deceive.
Trademark Use and Comparative Advertising
In Constellation Brands US Operations Inc. c. Société de vin internationale ltée, 2021 QCCA 1664 the Quebec Court of Appeal illustrates the rather unexpected ways that the Trademarks Act can apply to comparative advertising. If the mark in issue is registered for use in association with goods only, the plaintiff can restrain the defendant’s use of its mark which comes within the definition set out in the Act for goods. Under this definition, a trademark is deemed used in association with goods if, at the time of the transfer of the property in or possession of such wares, in the normal course of trade, it is marked on the goods themselves or on the packages in which they are distributed, or it is in any other manner so associated with the goods that notice of the association is then given to the person to whom the property or possession is transferred. However, if the mark in issue is registered for use in association with services, the broader definition of “use” for services applies and the plaintiff can restrain the defendant’s use of its mark in advertising. Comparative Advertising and Section 22 of the Trademarks Act (johnmckeownblog.com)
If you have questions, please contact me at email@example.com.
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1600
Toronto, Ontario M5G 1V2