Notable Canadian trademark cases
Key developments in Canadian trademarks practice
There were many lessons for Canadian trademark owners in 2021. These include reminders of the challenges of enforcing inherently weak trademarks and the importance and benefits of registering IP rights at the Canadian border. As well, amid ongoing delays at the Canadian Intellectual Property Office (CIPO), brand owners now have options for expediting examination of Canadian trademark applications.
This article looks back at key developments in Canadian trademark practice during 2021 and highlights a number of notable Canadian trademark cases and decisions.
Notable Canadian trademark cases
Loblaws Inc v Columbia Insurance Company
In one of the more notable trademark decisions of 2021,(1) the Federal Court of Appeal affirmed the Federal Court's trial decision holding that kitchenware brand Pampered Chef had not infringed Loblaws's PC marks.
Loblaws, Canada's largest retailer, uses the well-known word mark PC and the PC script mark (the PC marks) for a wide range of goods and services, including grocery, kitchenware and household products.
In 2015, the defendant, Pampered Chef, adopted a family of marks that included certain logos. Pampered Chef makes and sells high-quality kitchen tools. They use these marks in association with their direct marketing business.
At trial, Loblaws alleged that Pampered Chef's use of its short-form logos infringed Loblaws's registered rights in its PC marks. The trial judge concluded that confusion was unlikely.
The Court of Appeal agreed with the trial judge that there was no likelihood of confusion, observing that:
- Although the Trademarks Act states that resemblance is to be assessed in "appearance or sound or in the ideas suggested", the word "or" is intended to be inclusive and the trial judge had been correct to consider both the appearance and sound of the marks.
- There was no evidence of actual confusion. There is no set period during which competing marks must co-exist before an adverse inference may be drawn from the absence of evidence of actual marketplace confusion. While the parties' marks only co-existed for two to three years, it was open to the trial judge to infer that, if the marks were confusing, there would have been some evidence of actual confusion given Pampered Chef's high volume of sales, the intense exposure of the marks on social media and Loblaws's robust trademark enforcement and monitoring programmes.
- There was no error in the trial judge's consideration of the evidence that Pampered Chef's short-form logos were deployed together with its corporate name or long-form logo as a surrounding circumstance.
For further discussion of this case, see "Pampered Chef succeeds again in trademark infringement battle".
Hidden Bench Vineyards & Winery Inc v Locust Lane Estate Winery Corp
In one of the first trademark decisions of 2021,(2) the Federal Court of Canada confirmed that road names can be clearly descriptive of a place of origin.
The case involved two wineries operating on Locust Lane, a road in the Canadian province of Ontario. Both parties used the term "Locust Lane" in association with their wine.
The applicant, Hidden Bench, had been using the term "Locust Lane" in association with wine or vineyard services for almost two decades. "Locust Lane" was used in combination with other words, such as "Locust Lane Vineyard" and "2013 Locust Lane Pinot Noir".
The respondent, Locust Lane Estate Winery Corp (LLEW), was founded in 2019 and began using its name to market its wines and related services.
The applicant claimed that it owned the unregistered trademark LOCUST LANE, and that LLEW's use of the mark constituted passing off.
The Court found that the applicant was unable to establish the requisite goodwill in order to found a claim of passing off. The Court held that the LOCUST LANE marks were clearly descriptive of the place of origin and lacked inherent distinctiveness. In such cases, it is typically very difficult to succeed in a passing-off action without evidence of secondary meaning (namely, a very significant reputation).
The Court also focused on the fact that the applicant's LOCUST LANE marks were always displayed together with the more distinctive and prominent HIDDEN BENCH house mark, and further that LOCUST LANE was always displayed in black font on the bottom half of the label and surrounded by other text about the wine or winery.
This case emphasises the risk of choosing geographically descriptive trademarks. The case also highlights the benefits of registering secondary trademarks to avoid a court giving less weight to an unregistered secondary brand appearing together with a more dominant house mark.
For a full discussion of this case, see "Locust Lane: can a road name be an enforceable trademark?".
Subway IP LLC v Budway, Cannabis & Wellness Store
This decision,(3) involving brands in both the emerging cannabis and traditional fast-food sectors, serves as a reminder of the dangers of adopting parody marks that piggyback on the reputation and goodwill of established brands.
Subway IP LLC (Subway) is the owner of a well-known mark, which it uses in connection with sandwich restaurants.
Budway, Cannabis & Wellness Store (Budway), a cannabis retail store in Vancouver, British Columbia, adopted a mark in association with its business.
Budway's advertising also featured a digital "mascot" – a submarine sandwich filled with cannabis leaves with bloodshot and half-opened eyes.
Subway brought an application in the Federal Court of Canada (a more streamlined proceeding than an action) for trademark infringement, passing off and depreciation of goodwill (or "dilution"). The Court agreed with Subway, awarding permanent injunctive relief, damages and costs.
After considering all of the surrounding circumstances, the Court concluded that there was a reasonable likelihood of confusion, adding that "the context makes it perfectly clear that [Budway has] adopted their mark by deliberately drawing on the famous mark of [Subway]."
Notably, the parties' goods overlapped in the present case (with respect to foodstuffs and edible products), unlike in the 2020 parody case Toys "R" Us (Canada) Ltd v Herbs "R" Us Wellness Society, where the cannabis products offered by the respondent and the toys of the applicant were considered fundamentally dissimilar, such that there was no finding of a likelihood of confusion.
For a full discussion of this case, see "Court finds Subway's trademark infringed by cannabis retailer's BUDWAY parody mark".
H-D USA, LLC v Varzari
This trademark decision(4) is a reminder that the use of genuine branded parts can be offside, particularly where, as here, they are incorporated into a new product.
The applicants, H-D USA, LLC and Harley-Davidson Canada LP (Harley-Davidson) own the word marks HARLEY-DAVIDSON (the Harley-Davison mark) and H-D (the H-D mark) for use in association with, among other things, motorcycles and a variety of motorcycle parts, as well as certain logos.
The respondent, Eli Varzari (Varzari), was advertising a custom-built electric bicycle as the "Harley Davidson Willie G Edition" and the "Harley Davidson Edition", noting that the handgrips and axle bolt covers, which bore the H-D mark and the skull design mark, respectively, were "original parts from the factory".
Harley-Davidson brought an application in the Federal Court alleging infringement, passing off and depreciation of goodwill, which the Court granted in its entirety, awarding permanent injunctive relief, damages and costs.
According to the Court, "no extensive analysis is needed" to find infringement because there is "little doubt a casual consumer somewhat in a hurry viewing [Varzari's] electric bicycle . . . would infer it was manufactured or sold by or under license of Harley-Davidson".
The Court found Varzari's incorporation of genuine handgrips and axle bolt covers bearing Harley-Davidson's well-known marks into his custom electric bicycles to be infringing. While the resale of lawfully acquired trademarked goods is not, itself, prohibited (according to the principle of exhaustion), "Varzari is not simply reselling motorcycle parts . . . he is altering them and incorporating them into a new good in such a way that the new good, the bicycle, bears the trademark and thereby suggests an association with [Harley-Davidson]".
In terms of passing off, Harley-Davidson relied on unregistered rights in a particular shade of orange. The Court held that colour can constitute an enforceable trademark, noting that, since the amendments to the Trademarks Act came into force in 2019, a "trademark" is defined as a "sign" that explicitly includes a "colour". As the evidence showed that Harley-Davidson had used a particular orange shade to distinguish its goods from those of others, it could form the basis for a passing-off claim.
In terms of depreciation of goodwill, the Court was easily satisfied with respect to the requisite "mental linkage" between the parties and their marks, stating that "all signs point to . . . linkage being exactly what Varzari was trying to establish and profit from in selling his electric bicycles".
Nintendo of America Inc v King of Windows Home Improvements Inc
This case,(5) involving both trademarks and copyrights, serves as a useful reminder of anti-counterfeiting measures available to brand owners, and the benefits of recording brand rights with the Canada Border Services Agency (CBSA).
Nintendo of America Inc (Nintendo) obtained default judgment against the defendants for both trademark and copyright infringement based on documents obtained from the CBSA, which had detained the infringing goods at the Canadian border.
The Court found that the defendants had imported video game consoles containing unauthorised copies of at least three of Nintendo's works. The consoles were provided with external packaging and a printed games list that bore marks confusingly similar to Nintendo's marks. The relief included, among other things, a permanent injunction, damages of C$8,000 for each of the four infringed trademarks and statutory damages of C$20,000 per registered copyright.
For more details on protecting brands at the border, see "How to record brand rights and stop counterfeit goods at the border".
Norsteel Building Systems Ltd v Toti Holdings Inc
This notable trademark decision(6) serves as a practical reminder to brand owners that simply registering a mark does not eliminate the need to consider prior use of unregistered marks.
Norsteel Building Systems Ltd (NBS) did not own any relevant trademark registrations, but was able to strike the registered trademark of Toti Holdings Inc (Toti) based on NBS's prior use of a confusing unregistered mark. More specifically, NBS was able to strike Toti's registration for NORSTEEL, based on NBS's earlier use of the unregistered trademark and the trade name NORSTEEL BUILDING SYSTEMS.
Both parties used their respective marks in association with similar goods and services.
The Court found that there was a likelihood of confusion between Toti's 2017 registered mark NORSTEEL and the applicant's decades-old unregistered trademark and trade name NORSTEEL BUILDING SYSTEMS. The Court found that Toti's trademark registration was invalid because it was not distinctive and because Toti was not entitled to register the mark since NORSTEEL was confusing with the applicant's prior-used unregistered trademark and trade name.
This case serves as a good reminder for brand owners to consider the Canadian marketplace before they launch new products and apply to register trademarks. One available tool is a marketplace search, which can help a brand owner assess the likelihood of confusion with unregistered brands of others.
Key developments in Canadian trademarks practice
In 2021, the Canadian Intellectual Property Office (CIPO) continued its efforts to reduce its backlog and address very significant delays in its handling of trademark applications. Outlined below are three new options available to brand owners to expedite the examination of Canadian trademark applications.
On 3 May 2021, CIPO published a practice notice entitled Requests for expedited examination, expanding the list of situations for which it will accept requests for expedited examination. In addition to circumstances where an application lists goods or services that prevent, diagnose, treat or cure covid-19 (the subject of a 2020 practice notice), an expedited examination is now available to any applicant that can establish one of the following criteria:
- a court action is expected or underway in Canada with respect to the applicant's trademark in association with the goods or services listed in the application;
- the applicant is in the process of combating counterfeit products at the Canadian border with respect to the applicant's trademark in association with the goods or services listed in the application; or
- the applicant requires registration of its trademark to protect its IP rights from being severely disadvantaged in online marketplaces.
The request for expedited examination must be accompanied by an affidavit setting out the specific circumstances for the request. Recent experience has shown that, where the affidavit satisfies the criteria, CIPO is able to swiftly grant such requests and examine the application within a week or two from the filing of the affidavit. No government fee is required.
Measures to improve efficiency in examination
On 3 May 2021, CIPO published a practice notice entitled Measures to improve timeliness in examination, outlining the following practice changes:
- Applications listing only pre-approved goods and services from the Canadian Goods and Services Manual will be examined "more quickly" than other applications since they require less scrutiny from examiners.
- When issuing a first examiner's report, examiners will no longer provide examples of acceptable goods or services where amendments are required. Once the applicant has filed an amended application, the examiner may provide examples in a subsequent report.
- Examiners will issue final refusals. While examiners always had the power to do so, it was rarely exercised. Now, examiners will only be required to address a particular submission once. If a subsequent response does not overcome the objection and does not raise new arguments, the application may be refused. Once refused, the only recourse is to file an appeal with the Federal Court.
For a full discussion, see "Trademarks Office publishes new practice notices to reduce examination delays" and "Two ways to fast-track your Canadian trademark application".
Acceptable telephone amendments
To improve efficiency, CIPO broadened the list of acceptable telephone amendments for simple prosecution issues. As of 19 February 2021, instead of issuing a formal examiner's report, examiners are now permitted to call an applicant, or their Canadian trademark agent, directly to discuss the following deficiencies:
- incorrect visual representation;
- incomplete translations and transliterations;
- incorrect trademark type;
- incomplete description;
- simple issues with the statements of goods and services, including Nice Classification; and
- incomplete mailing address.
Upon receipt of a telephone objection, the applicant (or their agent) has five business days to provide a written response to address the deficiencies identified. If this deadline is not met, a formal examiner's report will ensue.
See "CIPO broadens list of acceptable telephone amendments in trademark prosecution", which discusses this change in practice.
For further information on this topic please contact Philip Lapin, Tierney GB Deluzio or Laura Easton at Smart & Biggar by telephone (+1 613 232 2486) or email ([email protected], [email protected] or [email protected]). The Smart & Biggar website can be accessed at www.smartbiggar.ca.
(1) 2021 FCA 29.
(2) 2021 FC 156.
(3) 2021 FC 583.
(4) 2021 FC 620.
(5) 2021 FC 291.
(6) 2021 FC 927.