Tequila Cuervo, S.A.(“Cuervo“) filed an application in the Canadian Intellectual Property Office for the registration of the trademark LAZARO COHIBA based on proposed use in Canada with alcoholic beverages. Empresa Cubano Del Tabaco (“Empresa“), a distributor of tobacco related products that predominately distributes cigars and holds the COHIBA trademark, opposed the application on several grounds, including the likelihood of confusion.

The Trademarks Opposition Board, in a decision rendered September 30, 2008, rejected all of the grounds of opposition and in doing so placed considerable weight on the fact that Empresa had not established an extensive reputation for its mark.  Also relevant was the differences between the wares of the parties, as well as the channels and trades of the parties. Empresa appealed the Board’s decision to the Federal Court of Canada, submitting new evidence with respect to the above two issues.

On the reputation issue, Empresa submitted expert evidence of Cohiba cigar’s iconic brand status, noting that this brand was featured in television shows, movies and other media forms. This evidence was corroborated by other affidavit evidence establishing that the Cohiba cigar brand had been featured in magazines and other media content that had been circulated throughout Canada. On the distinctiveness issue, expert evidence was tendered to establish that users of tobacco and alcohol often consume both products, and that the use of one involves the use of the other. On this latter issue, new evidence was submitted by Empresa showing that many stores sold both hard alcohol and cigars.

In its October 4, 2013 decision, the Federal Court, in light of this new evidence, reversed the Board’s decision and held that the test for confusion had been met. The Court first noted that Empresa’s cigar sales in Canada were not insignificant and accepted the evidence establishing that the COHIBA cigar brand had an iconic status. On this latter point, the Court noted that “personal ownership or use of the product is not essential to the awareness or knowledge of a trademark.”

With respect to the distinctiveness issue, the Court held that the sale of cigars and spirits in many stores across Canada was not particularly persuasive on its own. However, the Court noted that,

[t]he reason why the proximity of cigars and alcohol is important for the analysis only becomes apparent upon examination of the relationship between smoking and alcohol. This is where the [expert evidence] is very helpful.

The Court accorded significant weight to the fact that a smoker subjectively relates alcohol to cigars, and therefore, a “predisposition for confusion” exists. Moving forward, it remains to be seen how far this reasoning can be taken. Does such a predisposition exist with wine and cheese, particularly in those parts of Canada where they are available in the same store?

Thus, the iconic status of COHIBA, coupled with the close relationship between sales of alcohol and tobacco led the Court to conclude that there was confusion.