Ottawa Athletic Club Inc. v. The Athletic Club Group Inc. et al., 2014 FC 672

The Ottawa Athletic Club (“OAC”) brought an application under s. 57 of the Trade-marks Act (the “Act”) to expunge the trade-mark THE ATHLETIC CLUB & DESIGN (the “Trade-mark”) from the Register. The OAC has operated a fitness facility in Ottawa since at least 1976. The Athletic Club first opened in London, Ontario in 1997, then opened facilities in a number of other cities including Ottawa in 2010 and 2011. The Trade-mark was applied for in 2003 and registered in 2005. The Registration disclaimed the right to the exclusive use of the words ATHLETIC CLUB. The OAC sought to strike the Trade-mark on a number of grounds, and also sought a permanent injunction against the Athletic Club.

The OAC alleged that the Athletic Club was not entitled to register the Trade-mark as a result of section 16(1) (a) and (c) of the Act. However, it was noted by the Court that five year limitation period in section 17 had passed. The OAC thus argued that section 17(2) applied in that the person who adopted the Trade- mark did so with the knowledge of the OAC. The Court found that the OAC did not establish this knowledge on the part of the Athletic Club after considering a number of arguments, including whether an adverse inference should be drawn by the Court because the two individuals who adopted the Trade-mark did not provide affidavits. The Court declined to draw an adverse inference, concluding that “the authorities  are clear in my view that while an adverse inference can strengthen weak evidence or turn a prima faciecase into a conclusive one, it cannot enable the party bearing the burden of proof to overcome a complete lack of evidence on the point at issue. There must be a case to answer before the Respondent is required to introduce the best evidence or risk an inference that it does not favour their position.” The Court found that the OAC did not present a case for the Athletic Club to answer in respect of their knowledge of the OAC. The Court also considered whether to impute knowledge as a result of the solicitor’s knowledge, but decided that there was not sufficient evidence to establish that the information was material to the incorporation of the Athletic Club in London or that a duty to inform arose. As a result, the OAC’s arguments pursuant to section 16(1)(a) and (c) failed.

The OAC also alleged that the Trade-mark was not registrable at the date of registration pursuant to section 12(1)(b) of the Act. The Court found that the Trade-mark, when sounded, is clearly descriptive of the wares and services with which it is associated. In defence, the Athletic Club argued acquired distinctiveness. The Court found that the evidence did not establish distinctiveness. As a result, the Court found that the Trade-mark should be expunged. The Court also found that the OAC has shown that the Trade-mark contravened section 12(1)(c) of the Actand was therefore not registrable.

With respect to the OAC’s arguments in accordance with section 10 of the Act, the Court concluded that the evidence was sufficient to establish that the term “athletic club” had been used extensively in Canada had a well-understood meaning within the industry. The Court found that the OAC established that the Trade-mark is prohibited under section 10, as well as 11 and 12(1)(e). The Court ordered the expungement of the Trade-mark as well as a permanent injunction on the basis that “a mark that offends s. 10 is one that “no person shall adopt” (s. 10) and “[n]o person shall use in connection with a business” (s. 11).”