The Federal Court of Appeal recently has ruled against Philip Morris in its latest attempt to sell its MARLBORO cigarettes in Canada. In 1930, a predecessor of Philip Morris sold the Canadian rights to the MARLBORO trademark to a predecessor of Imperial Tobacco. Then, in 1987, after the advent of the Marlboro Man and the increased reputation of the Marlboro brand around the world, Philip Morris challenged the validity of Imperial Tobacco’s registration for the MARLBORO trademark on the basis that the notoriety in Canada of Philip Morris' MARLBORO trademark negated the distinctiveness of the MARLBORO registration in Canada. The Federal Court of Appeal disagreed with Philip Morris’ contention and found that the MARLBORO registration of Imperial Tobacco is valid.
In this latest attempt to introduce the MARLBORO brand into Canada, Philip Morris launched in Canada a “no-name” version of its American blend Marlboro cigarettes. The packages have essentially the same "Rooftop" design as Philip Morris has been using for its MARLBORO cigarettes around the world (apart from Canada) for many years, but without any brand name on them at all. Until the launch of the “no name” version, the cigarettes sold in Canada in Philip Morris’ “Rooftop” packages have been Virginia blend cigarettes and the packages were marked “Matador” or “Maverick.” The use of a no-name package is apparently a first in cigarette marketing in Canada, in which, as a result of the “dark market” regulations, packages are not allowed to be on display in retail stores.
After the launch, Philip Morris commenced an action for a declaration that it does not infringe Imperial Tobacco’s rights under the Canadian MARLBORO registration by selling the no-name version of its MARLBORO cigarettes, and alleging that Imperial’s package design infringed Philip Morris’ copyright in its package design. A counterclaim by Imperial for an injunction preventing the sale of the no-name cigarettes brought the validity of the Philip Morris’ package design registrations and the validity of Imperial’s MARLBORO registration once again into play.
The trial judge ruled in favour of Philip Morris in finding that Philip Morris is entitled to sell its MARLBORO cigarettes in Canada in the no-name packaging. The Federal Court of Appeal has now reversed the trial judge and has enjoined Philip Morris from selling its cigarettes in the no-name packaging in Canada.
The evidence at trial was that consumers ask for “Marlboro” when ordering the no-name cigarettes, even though Marlboro is not on the package and that Philip Morris had told retailers to refer to them as “Rooftop” cigarettes. In finding infringement despite the omission of the word “Marlboro” on the package, the Federal Court of Appeal held that the “mental link” formed in the minds of consumers between the no-name package and the MARLBORO trademark could be considered as part of a Section 6 confusion analysis, either on the basis that the “idea suggested” by the package design was MARLBORO or that the mental link formed in the minds of consumers was a “surrounding circumstance” that could be considered. Both approaches appear to be novel. The Court apparently preferred these approaches over an alternative approach that by creating the mental link Philip Morris was, in effect, using the MARLBORO trademark itself because consumers were “filling in the blank” as Philip Morris intended them to do. In the result, the Court held that since consumers are referring to two different products from two different manufacturers by the same name, there is a likelihood of confusion as to source and therefore Philip Morris was enjoined from continuing to use its no-name packages.
The fact that Philip Morris had registered many of the individual designs on its no-name packaging was not a bar to Imperial Tobacco getting relief because the exact overall packaging design had not been registered. The Court noted that a valid registration can be a defence to infringement or passing off, but in this case the “Rooftop” no-name package design as a whole, including the words “Come to Where the Flavour is” on the front of the package and the words “World Famous Imported Blend” on the side of the package, was not registered. On this basis, it was open to the Federal Court of Appeal to enjoin the use of the no-name package without first having to invalidate Philip Morris’ individual design element registrations. Philip Morris’ attack on Imperial’s registration for MARLBORO was prohibited by the Federal Court of Appeal’s earlier decision since Philip Morris was not able to show that the circumstances had changed in any material way since the last time the Federal Court of Appeal had ruled in Imperial’s favour on the issue. The dismissal of the copyright infringement claim by Philip Morris was also upheld.