A recent decision of the Federal Court of Appeal provides a road map for carrying out a confusion analysis and also supports the application of an initial interest approach to the determination.

The Facts

Reynolds Presto Products Inc. (Presto) registered the trade mark GEOWEB in Canada in 2001 in association with road base and ground support plastic webbing sheets for building roads and preventing erosion of roads.

In 1996 Presto granted P.R.S. Mediterranean Ltd. (P.R.S) a license to use the GEOWEB trade mark in association with the manufacture and sale of its plastic webbing sheets. When the license expired in 2006 P.R.S. began to compete with Presto in relation to similar plastic webbing sheets.  

In August 2007, P.R.S. applied to register the trade mark NEOWEB use in association with similar wares and the trade mark was eventually registered in 2010.

Presto applied to the Federal Court to expunge P.R.S’s NEOWEB registration. It was alleged that the NEOWEB mark was confusing with the GEOWEB mark.

The Federal Court Decision

The test for confusion is set out in subsection 6(5) of the Trade-marks Act and is as follows:

(5) In determining whether trade-marks or trade-names are confusing, the court or the Registrar, as the case may be, shall have regard to all the surrounding circumstances including

(a) the inherent distinctiveness of the trade-marks or trade-names and the extent to which they have become known;

(b) the length of time the trade-marks or trade-names have been in use;

(c) the nature of the wares, services or business;

(d) the nature of the trade; and

(e) the degree of resemblance between the trade-marks or tradenames in appearance or sound or in the ideas suggested by them.

The judge said he had eliminated consideration of all of the factors set out above with the exception of the inherent distinctiveness of the trade-marks and the extent to which they had become known, the degree of resemblance between the trade marks in appearance or sound or in the ideas suggested by them and all of the surrounding circumstances.

The judge concluded that the use of the GEOWEB and NEOWEB trade marks in Canada would not likely lead to the inference that the wares associated with the marks were manufactured or sold by the same person.  As a result the application was dismissed.

The Appeal

The court of appeal said that the nature of the wares (subsection 5(c)) and the nature of the trade (subsection 5(c)) assist in determining whether the two trade-marks were confusing, particularly where both companies sold the same type of wares and carried on similar types of business. The judge should have considered these matters in determining whether the respective marks were confusing.

The court of appeal applied the approach set out in a recent decision of the Supreme Court of Canada.  In that case the court said the test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who sees the mark, at a time when he or she has no more than an imperfect recollection of the prior trade mark, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks.

Consumers in the market for expensive goods may be less likely to be confused when they encounter a trade mark, but the test is still one of “first impression”. Consideration of the nature of the wares, services or business should take into account that there may be a lesser likelihood of trade mark confusion where consumers are in the market for expensive or important wares or services. The reduced likelihood of confusion is still premised on the first impression of consumers when they encounter the marks in question.

It is not relevant that consumers are unlikely to make choices based on first impressions or that they will generally take considerable time to inform themselves about the source of expensive goods and services.  Both of these considerations- subsequent research or consequent purchase – occur after the consumer encounters a mark in the marketplace.

This distinction is important because even with this increased attentiveness, it may still be likely that a consumer shopping for expensive goods and services will be confused by the trade marks they encounter. Careful research and deliberation may dispel any trade mark confusion that may have arisen. However, that cannot mean that consumers of expensive goods, through their own caution and wariness, should lose the benefit of trade mark protection. It is confusion when they encounter the trade marks that is relevant. Careful research which may later remedy confusion does not mean that no confusion ever existed or that it will not continue to exist in the minds of consumers who did not carry out that research.

Before source confusion is remedied, it may lead a consumer to seek out, consider or purchase the wares or services from a source they previously had no awareness of or interest in. Such diversion diminishes the value of the goodwill associated with the trade mark and business the consumer initially thought he or she was encountering on seeing the trade mark. Leading consumers astray in this way is one of the evils that trade mark law seeks to remedy. Consumers of expensive wares or services and owners of the associated trade marks are entitled to trade mark guidance and protection as much as those acquiring and selling inexpensive wares or services.

The court of appeal applied this approach and said the test is whether the consumer who sees a particular trade mark and who has an imperfect recollection of another trade mark will erroneously assume that the goods or services associated with the particular trade mark are associated with the other trade mark. The burden was on Presto to establish that it is more likely than not that a consumer who encounters the NEOWEB trade mark in association with its wares (when that consumer has an imperfect recollection of the GEOWEB trade mark in association with the same or substantially the same wares) would be confused and erroneously assume that the NEOWEB wares were being sold by Presto. Even though the respective wares would be considered to be expensive items with only a limited market, “the test is still one of ‘first impression’.

The court of appeal said that in comparing the entire trade mark NEOWEB with GEOWEB only the first letter was different and, as a whole, each is comprised of a Greek prefix with the same suffix. The two sound similar (they rhyme) and the use of “neo” as a prefix could suggest that NEOWEB is simply a newer version of GEOWEB. As a result NEOWEB would likely cause confusion with consumers with an imperfect recollection of the GEOWEB trade mark. Since the wares associated with each trade-mark are the same wares (or substantially the same wares) and since the markets for the wares are the same, the likelihood of confusion is even greater and elevated to the point where it would be more likely than not that the consumer with the imperfect recollection of the GEOWEB trade mark would be confused about whether NEOWEB wares were made by Presto.

Comment

To date no Canadian Court has considered the U.S. doctrine of “initial interest confusion”.  This doctrine allows for a finding of infringement where a plaintiff demonstrates that a consumer was confused by a defendant’s conduct at the time of interest in a product or a service, even if the initial confusion is corrected by the time of purchase. However, the reasoning of the Supreme Court of Canada as discussed above and the Presto appeal appears to accept and apply substantial elements of the concept although no specific reference was made to it.

While the decision reached is not remarkable this approach may result in a more expansive approach to trade mark infringement in the future.