While many interesting trade-mark cases were decided in Canadian courts in 2010, this paper will outline just a few of the more notable decisions.

Passing Off/Infringement

Philip Morris Products S.A. v. Marlboro Canada Limited was the most interesting Federal Court decision of 2010.

Marlboro cigarettes are the world’s top-selling cigarettes, but they are not available in Canada. While Philip Morris owns the Marlboro brand internationally, in Canada the Marlboro trade-mark is owned by Marlboro Canada. In 2006, Philip Morris began selling cigarettes in Canada using its internationally recognized Rooftop packaging, but without the Marlboro trade-mark. Marlboro Canada objected to the launch of the product, and in response, Philip Morris sought a declaration that the sale of the Rooftop cigarettes did not contravene the rights of Marlboro Canada in its Marlboro registration. Marlboro Canada responded with a counterclaim alleging trade-mark infringement. The Federal Court allowed the application for a declaration of non-infringement and rejected the counterclaim.

Marlboro Canada claimed that the use of the Rooftop packaging called the Marlboro trade-mark to mind and thus was use of the Marlboro mark. The Court held that:

  • the connection that some consumers may make because they are aware of the use of the Rooftop packaging with the Marlboro mark outside of Canada cannot create a use in Canada; and
  • a mark cannot be said to be used only as a result of some abstract mental association in the mind of a consumer.

The Court concluded that the association contemplated under section 4(1) of the Trade-marks Act must be ascertainable in some tangible way. To hold otherwise would lead to uncertainty as to the scope of trade-mark rights generally. Since “use” is a precondition for infringement, there was no infringement.

Marlboro Canada also argued there was reverse confusion but that argument was rejected on the basis that, to the extent that some consumers refer to the Philip Morris product as Marlboro, there is no confusion as to the source since none of the consumers associated the package with the Marlboro Canada product.

Expungement

Two Federal Court decisions dealt with family battles over surnames as trade-marks and came to different conclusions.

CIBC World Markets Inc. v. Stenner Financial Services Ltd., considered an application to expunge the trade-mark Stenner. The Court noted that this “particular litigation is part of a nasty continuing intra-family fight pitting father against daughter and father against son.” The father, Gordon Stenner, worked for various companies, including his own company Stenner Financial Services Ltd., appeared on TV and radio, and developed investment strategies, all the while using Stenner in conjunction with other words such as "team", "system" and "report". In 2003, Gordon applied to register the trade-mark Stenner and the trade-mark was ultimately registered based on his evidence that the mark had become distinctive of him. Gordon’s son, Thane, and his employer at that time, CIBC, successfully challenged the registration.

The Court concluded that Stenner was a surname and that it had not acquired distinctiveness: any use of the name was always in conjunction with other words that were continually changing such that Stenner had not acquired distinctiveness itself. The use of the name by Thane and Vanessa (Gordon’s daughter) also pointed to a lack of distinctiveness of the mark.

With respect to the public policy grounds, the Court noted that it would be inequitable, except in the clearest cases, for a parent to claim a monopoly over the family name and preclude their children from using it. The Court concluded this was not one of those cases.

Miranda Aluminum Inc. v. Miranda Windows & Doors Inc. was another intra-family fight in the Federal Court. A son (Miranda Windows & Doors) owned the trade-mark Miranda. His father (Miranda Aluminum) moved unsuccessfully to expunge the trade-marks on various grounds, including his own use of Miranda. However, the Court found that much of the father’s use appeared “to have been intended to make potential customers believe that his business was actually his son’s business” and concluded that its use to confuse consumers could not be used for the purposes of challenging a registration. Although the Court held that Miranda was primarily merely a surname and thus not registrable under section 12(1)(a) of the Trade-Marks Act, it was saved under section 12(2) in that, as of the date of filing the application, the mark had acquired distinctiveness. The Federal Court upheld the lower court decision.

Apotex Inc. v. (Canada) Registrar of Trade-marks arose out of the Federal Court’s decision to expunge Glaxo’s trade-mark for a two-tone purple colour combination applied to visible surfaces of inhalers. The Federal Court determined that the trade-mark was not distinctive and noted that physicians, pharmacists and patients must relate the mark to a single source and thereby use the mark to make their prescribing, dispensing and purchasing decisions. The Court of Appeal agreed.

Appeals from Opposition Decisions

The Federal Court in Scott Paper Ltd. v. Georgia-Pacific Consumer Products LP heard an appeal from a decision of the Registrar of Trade-marks rejecting an application by Scott Paper to register Daisy Flower (Square) Pattern Design for use with bathroom tissue on the basis that the mark did not distinguish the wares of Scott Paper from those of Georgia-Pacific.

The Registrar rejected Georgia-Pacific’s claim to prior use of a confusing mark on the basis that the Georgia-Pacific mark was not visible to the consumer at the time of purchase. The fact that consumers saw the mark after purchase when they opened the packaging did not constitute use of the mark. However, the Registrar concluded that, while there may not have been “use” of the Georgia-Pacific mark, there was nonetheless an acquired reputation such that the Scott Paper mark was non-distinctive.

The Federal Court allowed the appeal, noting that the Registrar’s decision was based on the unfounded and improper assumption that Georgia-Pacific’s mark may have had some reputation, when it had never been presented to consumers as a trade-mark in any context. While it was not necessary to show use under section 4, it was necessary to show that the mark was known as an indicator of source and not merely known. Accordingly, the Registrar’s decision was overturned.

The Federal Court in Worldwide Diamond Trademarks Ltd. v. Canadian Jewellers Association heard an appeal by Worldwide Diamond from the dismissal of three of its applications to register design trade-marks in association with diamonds and related wares and services. The Registrar of dismissed the applications because the proposed marks were clearly descriptive of their associated wares and services. The Federal Court concluded that it was open to the Registrar to find that the design elements of the composite marks (marks composed of both words and a design element) were not dominant and thus could not prevent the mark from being clearly descriptive when sounded by reference to the dominant words. The decision was upheld by the Federal Court of Appeal.

Section 45 Decisions

In Jose Cuervo S.A. de C.V. v. Bacardi & Company, the Federal Court of Appeal determined that a voluntary decision not to use the Castillo mark could not constitute special circumstances justifying non-use of a mark in Canada. Jose Cuervo decided to use a secondary mark, Cohiba, under licence as a part of a marketing strategy for Castillo rum. This triggered a dispute with a third party and Jose Cuervo decided to defer marketing of its Castillo products as a result. The Registrar determined that the threat of litigation might be a reasonable excuse for a short period of non-use but that a decision to wait out the litigation relating to a secondary mark for a period of six years amounted to a voluntary decision not to use the trade-mark in Canada, which would not constitute special circumstances. The Federal Court agreed that Jose Cuervo had acted voluntarily and went on to uphold the Registrar’s decision as being reasonable. The Court commented that it was “illogical to suspend the use of a valid Canadian trade-mark because of a threat of impending trade-mark litigation with respect to a secondary mark.” An appeal was dismissed by the Federal Court of Appeal, making it clear that a voluntary decision not to use a mark will be extremely difficult to justify.

When will special circumstances justify non-use? Cobalt Brands, LLC v. Gowling Lafleur Henderson LLP involved an appeal from a decision of the Registrar expunging Cobalt’s USQUAEBACH trade-mark registered in association with Scotch whiskey for failure to file evidence of use. On appeal, Cobalt was unable to provide evidence of use, but argued that there were special circumstances justifying non-use. The Federal Court agreed.

The Court considered Cobalt’s submissions with respect to special circumstances and noted that the history of ownership of the mark was “plagued by a series of unfortunate events,” including the death of the two controlling shareholders of a previous owner of the mark in 2001, the death of the principal owner of the company who acquired the mark in 2003, and a lengthy liquidation process. The fact that two registered owners of the mark were forced to discontinue carrying on their business due to deaths of the principal owners was sufficient to constitute circumstances justifying non-use between 2001 and 2007.

With respect to non-use since the mark was acquired by Cobalt in 2007, Cobalt argued it immediately began taking steps to re-commence production, which included finding a distiller, complying with provincial regulatory schemes, negotiating distribution rights and finding a licensed importer. The Court noted that Cobalt had to “rebuild the production and distribution of USQUAEBACH Scotch Whiskey from the ground up.” The Court held there were special circumstances justifying non-use of the mark in Canada.

Appropriate Boundaries with Respect to Protecting One’s Trade-mark Rights

In Industries Lassonde inc. v. Oasis d'Olivia inc., Lassonde sought to restrain Olivia from the use of its trade-mark Olivia's Oasis & Design. Lassonde alleged Olivia was infringing its trade-mark Oasis. Olivia sought to have Lassonde condemned as an abusive litigator on the basis that the action was frivolous, vexatious, prejudicial, or an attempt to defeat the ends of justice by thwarting Olivia in its lawful use of the mark. This allegation was made under the anti-SLAPP (Strategic Law Suit Against Public Participation) provisions of the Quebéc Civil Code which are intended to prevent improper use of the courts and to promote freedom of expression and citizen participation in public debate.

The Court concluded that:

  • the plaintiffs, using their economic power and experience, used a shotgun approach to attack the defendant simultaneously on several fronts with their full might, attempting to intimidate and thwart the defendant from its legitimate use of its trade name and trade-mark.
  • such menacing and abusive conduct cannot be condoned with impunity.
  • the defendant was forced to engage in a long, difficult and costly battle, not only economically draining to the company, but also personally to its president and sole representative — a battle with no legal foundation into which it was drawn.

As a result, the plaintiffs were ordered to pay Olivia $125,000 in damages.

Conclusion

As noted at the outset, there were many interesting trade-mark cases in 2010 – this paper has canvassed just a few of the more notable decisions.