The past year was a busy one with a number of interesting trade-mark cases decided in the Federal and the provincial courts. The year ahead also promises to be a busy one with important legislative changes on the way. This paper touches on some on the more interesting developments.

Interlocutory Injunctions

For parties seeking an interlocutory injunction, the Federal Court has not been a  friendly place over the past 20 years. Parties seeking interlocutory relief have had more success in the provincial courts.

The British Columbia Court raised eyebrows when it granted an interlocutory injunction in a passing off action restraining the defendant from using the word “Woodpecker” in association with the sale of hardwood flooring even though the defendant had a trade-mark registration for WOODPECKER for use in association with hardwood flooring.[1]

The defendant argued that its registration was a complete defence to a passing-off action under  section 19 of the Trade-Marks Act (“the Act”) and that, unless and until the registration was expunged, it had a right to use its mark.  The Court noted that section 19  says “unless shown to be invalid” and not “unless expunged” and took the view that a registration need not be expunged before a claim for passing-off could be pursued. Further, the Court noted that it was not being asked to determine whether the registration was invalid – only whether there was a serious question to be tried as to its validity. 

With respect to validity, the Court noted that the parties operated in close proximity to each other, that the Plaintiff had been in business for more than 10 years under the Woodpecker brand before the Defendant went into business and that the Defendant was aware of the Plaintiff and had visited the Plaintiff’s store.  On that basis, the Court was satisfied that there was a serious issue to be tried as to the validity of the registration.

The Court went on to find that irreparable harm would result if the injunction was not granted. In particular, the Court noted that:

The longer the defendants are permitted to use marks confusingly similar to the “Woodpecker” marks, the more their use becomes prevalent amongst the public – exacerbating harm, and making it more difficult to unscramble what business losses are due to this confusion and what losses are due to the traditional kinds of business considerations and competition in the marketplace.

… The problem is in unscrambling the damages in order to determine what those damages will be.  Even after the fact, that may well be impossible.  The plaintiff would be unable to quantify the loss of reputation, consumer confidence and good will as a result of confusion in the marketplace.

The Court granted the interlocutory injunction.

Criminal Sanctions

In an interesting development, a man received jail time for trade-mark and copyright infringement. 

The accused pled guilty to fraud, copyright infringement and trade-mark infringement for selling faux brand name products at his retail stall and out of the back of his van. He was sentenced to 15 months in prison, six of which were for the copyright and trade-mark infringement. His extensive criminal record, and the fact that he had committed the offences while serving a sentence in the community for a similar offence, informed the judge’s strict sentence.

He was granted leave to appeal the sentence and the Court of Appeal reduced his sentence to two months.[2]

Oppositions

Two opposition decisions dealt with the reputation of a mark within a specific ethnic community.

The opponent in Habib Bank Limited v. Habib Bank AG Zurich  argued that its mark had become known within a specific population in Canada, namely, South Asians.[3]

The Habib family established Habib Bank Limited (HBL) in 1941 in India and subsequently moved the head office to Pakistan. In 1967 it expanded to Switzerland and established Habib Bank AG Zurich (HBZ). In 1974, Pakistan nationalized all banks and the Habib family lost control of HBL but retained control of HBZ.  In 2004, HBZ filed applications to register HABIB in association with banking services and HBL opposed.

HBL argued that its mark was known in Canada by reason of South Asian immigrants who would have been familiar with its HABIB marks in their home countries. The Opposition Board refused to consider the argument that a “specific population” could satisfy the making known test because HBL had failed to establish that its marks had a sufficient reputation among any significant section of the Canadian population.

On appeal, HBL argued that proof relating to a discrete demographic market, directly targeted, could negate another’s distinctiveness “unbounded by a requirement of geography”.  The Court did not reject the argument but noted that there was no evidence to support the allegation – even if it could take judicial notice that there is a substantial South Asian population in the Greater Toronto Area, there was no evidence to show that HBL was known amongst that group.  The oppositions were refused.

Another opposition involved two Chinese bakeries.[4]  Saint Honore applied to register two marks consisting of Chinese characters which translated to SAINT HONORE and SAINT HONORE CAKE SHOP:

Click here to view the image

Cheung’s Bakery opposed on the ground that the marks were confusing with its own registered marks, ANNA’S CAKE HOUSE, ANNA’S CAKE HOUSE  & Design and ANNA’S CAKE HOUSE & Chinese Characters Design:

Click here to view the image

Cheung put forward evidence to show that the characters for “Anna” and the characters for “Honore” are both pronounced “an na” in Mandarin and “on no” in Cantonese and that the characters would be read the same and translated into the same English words. Cheung also put forward evidence to show that a large number of people in Canada, particularly in the Vancouver area, speak and understand Chinese.

The Board found that there was sufficient evidence to show that the average customer of Cheung’s cake shop was able to read and understand Chinese characters. As such, the marks were confusing and therefore the applications were refused.  On appeal, the Court upheld the Board’s decision with the result that the courts will consider, in the appropriate cases, that the “average consumer” may understand what is written in a Chinese or other linguistic character design.

In another opposition, the Federal Court considered whether alcohol and cigars have overlapping channels of trade.[5]  Tequila Cuervo applied to register LAZARO COHIBA for use with rum. Habanos opposed, alleging confusion with its COHIBA brand of Cuban cigars.

The Board rejected the opposition, stating:

… in view of the differences between the wares and trades of the parties and the fact that the opponents have not established an extensive reputation for their marks, I find that [Cuervo] has satisfied the onus to show, on a balance of probabilities, that its mark is not confusing …

This statement provided a road map for new evidence on appeal including expert evidence which spoke to the status of COHIBA as an iconic brand and also expert evidence regarding the propensity of consumers to drink alcohol while smoking cigars. There was also evidence to show that stores sold both cigars and alcoholic beverages. Based on this evidence, the Court concluded that there were overlapping wares and channels of trade between the parties. The appeal was allowed and the application refused.

Section 9 “Official Marks”

Section 9 of the Act[6] was the subject of a constitutional challenge.[7]  The Applicant argued that the section was beyond the legislative competence of Parliament and an unjustifiable restriction of freedom of expression under the Charter of Rights and Freedoms.

The Applicant created educational programs on traditional Chinese medicine and acupuncture and entered into a trade-mark license agreement with graduates of its programs, licensing the use of designations such as “D.T.C.M. (Doctor of Traditional Chinese Medicine)”. These licensees, however, had no right to practice TCM in British Columbia by reason alone of their graduation from the Applicant’s course.

The Respondent regulated the practice of traditional Chinese medicine (“TCM”) in British Columbia: only it could authorize individuals to practice TCM and acupuncture in that province. The Court concluded that the Respondent was a public authority for the purposes of the Act – it was under a significant degree of public control and existed for the public benefit.

In response to the Applicant’s continued use of D.T.C.M and related marks, the Respondent obtained protection for its marks as official marks.

While the Applicant did not contest that the Act is an exercise of the trade and commerce power under section 91(2) of the Constitution Act, it argued that sections 11 and 12(1)(e) of the Act – the provisions that prohibit others from using official marks – should be read down to be inapplicable to all matters assigned to the provinces, which would include the medical arts and health care professions. The Court noted that “reading down” is a device to be used where otherwise valid legislation impairs or trenches upon the legislative responsibilities of the other government.  However, where otherwise valid legislation has an incidental effects on provincial powers, reading down is not appropriate.  The Court noted that there was no evidence that, in consequence of these grants of official marks, any province has been unable to properly regulate the professions. On that basis, the Court refused to read down the sections.

The Applicant also argued that the provisions infringed the freedom of expression under section 2(b) of the Charter. Although the Court agreed that using a professional title was protected expression under the Charter, the infringement was justified under section 1 because there was a pressing objective to the “official marks” regime under the Act to prevent confusion between government and private services.

The challenge to section 9 was dismissed.

Legislative Changes

Finally, legislation is pending to amend the Act to provide for better remedies with respect to counterfeiting and also better border enforcement.  As well, other key amendments will:

  1. Change the definition of a “mark”:  a word, a personal name, a design, a letter, a numeral, a colour, a figurative element, a three-dimensional shape, a hologram, a moving image, a mode of packaging goods, a sound, a scent, a taste, a texture and the positioning of a sign; and,
  2. Allow for applications to be divided.

These amendments are still before Parliament, but they are expected to be passed into law in the very near future.

At the same time, the government has indicated its intention to accede to the Madrid Protocol, the Singapore Treaty and the Nice Agreement, all of which will make 2014 a very interesting year for Canadian trade-mark owne.