Last week, the Supreme Court of Canada (SCC) released its decision in Masterpiece Inc. v. Alavida Lifestyles Inc., clarifying the application of confusion analysis under the Trademarks Act. The issue in the case was whether the trade-mark “Masterpiece Living”, proposed in 2005 and subsequently registered by Alavida Lifestyles Inc., a company in the retirement residence industry in Ontario, was confusing with similar unregistered trade-marks used by Masterpiece Inc. in the retirement residence industry in Alberta since 2001.

Applying the test for confusion outlined in Veuve Clicquot Ponsardin v. Boutiques Cliquot Ltée, the SCC stated:

"the question is whether, as a matter of first impression, the ‘casual consumer somewhat in a hurry’ who sees the Alavida trade-mark, when that person has no more than an imperfect recollection of any one of the Masterpiece Inc. trade-marks or trade-name, would be likely to be confused; that is, that this consumer would be likely to think that Alavida was the same source of retirement residence services as Masterpiece Inc.

The decision included four key holdings related to the application of the test for confusion. First, the test for confusion is to be applied under the hypothetical assumption that the trade-marks are used in the same area, irrespective of whether they actually are. As such, for an owner of a registered trade-mark to have exclusive use in Canada there cannot be a likelihood of confusion with another trade-mark, registered or unregistered, anywhere in Canada.

Second, an unregistered trade-mark can be used to challenge a registration application or a registered mark based on confusion. This is because the first use of a trade-mark and not the registration itself confers priority of title and the exclusive right to use the trade-mark.

Third, confusion must be assessed from the perspective of the first impression of the consumer approaching a costly purchase when he or she encounters the trade-mark. A pricier purchase will generally be a factor against confusion as the consumer is deemed to have researched his or her decision. That said, high cost is likely not enough by itself to lead to a finding that the marks are not confusing.

Fourth, expert testimony should only be considered in confusion analysis if the testimony is likely to be outside the experience and knowledge of the judge. When the casual consumer is not particularly knowledgeable and there is a resemblance between the marks, expert evidence that simply assesses resemblance will not usually be necessary.